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UNITED STATES TRADE REPRESENTATIVE

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PUBLIC HEARING REGARDING TRADE-DISTORTING POLICIES THAT MAY BE AFFECTING SEASONAL AND PERISHABLE PRODUCTS IN U.S. COMMERCE

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THURSDAY AUGUST 13, 2020

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The hearing was convened via videoconference, at 9:00 a.m., William Kimmitt, Committee Chair, presiding.

HEARING COMMITTEE WILLIAM KIMMITT, Office of the U.S. Trade Representative, Chair CAMERON BISHOP, Deputy Assistant U.S. Trade Representative GREGG DOUD, Chief Agricultural Negotiator, Office of the U.S. Trade Representative JEFFREY KESSLER, Assistant Secretary of Commerce for Enforcement and Compliance, U.S. Department of Commerce TED McKINNEY, Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs, U.S. Department of Agriculture

ALSO PRESENT ROBERT LIGHTHIZER, U.S. Trade Representative SONNY PERDUE, Secretary, U.S. Department of Agriculture WILBUR ROSS, Secretary, U.S. Department of Commerce

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WITNESSES:

SESSION ONE:

SEN. , REP. , Florida 16th Congressional District REP. , Florida 9th Congressional District REP. ROSS SPANO, Florida 15th Congressional District REP. , Florida 17th Congressional District REP. , Florida 3rd Congressional District NIKKI FRIED, Commissioner, Florida Department of Agriculture and Consumer Services DAN SLEEP, Florida Department of Agriculture and Consumer Services

SESSION TWO:

JOHN HOBLICK, Florida Farm Bureau Federation ZHENGFEI GUAN, PhD, University of Florida MIKE JOYNER, Florida Fruit & Vegetable Association SERGIO CONTRERAS, Border Trade Alliance SCOTT VANDERVOET, Vandervoet & Associates SKIP HULETT, NatureSweet DEMETRIO KYRIAKIS, Nogales U.S. Customs House Brokers Association

GEORGE TUDOR, Desert Grape Growers League of

California

KENT STENDERUP, Delano Growers Grape Products

Cooperative

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SESSION THREE:

JEROME CROSBY, Georgia Blueberry Commission BRITTANY LEE, Florida Blueberry Growers Association MICHAEL HILL, H&A Farms KENNETH PARKER, Florida Strawberry Growers Association JOHN SIZEMORE, Sizemore Farms HILDA CASTILLO, Castillo Family Farms JOEL CONNELL, Grimes Farms DUSTIN GROOMS, Fancy Farms GENE McAVOY, University of Florida

SESSION FOUR:

MARK GREEFF, Driscoll's, Inc. DAN BALBAS, Reiter Affiliated Companies PAUL ALLEN, R.C. Hatton Farms JAMES ALDERMAN, Alderman Farms SAL FINOCCHIARO, S&L Bean MARIE BEDNER, Bedner Farms RICK ROTH, Roth Farms PATRICK CARROLL, Clear Springs CHRIS SPENCER, Florida Executive Office of the Governor

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CONTENTS Opening Remarks U.S. Trade Representative Robert Lighthizer. . . . 6 U.S. Secretary of Agriculture Sonny Perdue . . . . 8 U.S. Secretary of Commerce Wilbur Ross ...... 13

Session One Witness 1: Senator Marco Rubio (FL)...... 30 Witness 2: Congressman Vern Buchanan (FL-16) . . .18 Witness 3: Congressman Darren Soto (FL-09) . . . .24 Witness 4: Congressman Ross Spano (FL-15). . . . .44 Witness 5: Congressman William Gregory Steube (FL-17) ...... 39 Witness 6: Congressman Ted Yoho (FL-03)...... 66 Witness 7: Commissioner Nikki Fried, Florida Department of Agriculture and Consumer Services ...... 50 Witness 8: Mr. Dan Sleep, Florida Department of Agriculture and Consumer Services...... 56

Session Two Witness 9: Mr. John Hoblick, Florida Farm Bureau Federation...... 78 Witness 10: Dr. Zhengfei Guan, University of Florida...... 84 Witness 11: Mr. Mike Joyner, Florida Fruit & Vegetable Association...... 89 Witness 12: Mr. Sergio Contreras, Border Trade Alliance ...... 96 Witness 13: Mr. Scott Vandervoet, Vandervoet & Associates ...... 101 Witness 14: Mr. Skip Hulett, NatureSweet . . . . 115 Witness 15: Mr. Demetrio Kyriakis, Nogales U.S. Customs House Brokers Association. . . . . 116 Witness 16: Mr. George Tudor, Desert Grape Growers League of California ...... 125 Witness 17: Mr. Kent Stenderup, Delano Growers Grape Products Cooperative ...... 132

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Session Three Witness 18: Mr. Jerome Crosby, Georgia Blueberry Commission ...... 142 Witness 19: Ms. Brittany Lee, Florida Blueberry Growers Association...... 150 Witness 20: Mr. Michael Hill, H&A Farms. . . . . 157 Witness 21: Mr. Kenneth Parker, Florida Strawberry Growers Association ...... 168 Witness 22: Mr. John Sizemore, Sizemore Farms. . 177 Witness 23: Ms. Hilda Castillo, Castillo Family Farms...... 183 Witness 24: Mr. Joel Connell, Grimes Farms . . . 189 Witness 25: Mr. Dustin Grooms, Fancy Farms . . . 193 Witness 26: Mr. Gene McAvoy, University of Florida...... 198

Session Four Witness 27: Mr. Mark Greeff, Driscoll's, Inc.. . 205 Witness 28: Mr. Dan Balbas, Reiter Affiliated Companies...... 215 Witness 29: Mr. Paul Allen, R.C. Hatton Farms. . 220 Witness 30: Mr. James Alderman, Alderman Farms . 235 Witness 31: Mr. Sal Finocchiaro, S&L Bean. . . . 228 Witness 32: Ms. Marie Bedner, Bedner Farms . . . 242 Witness 33: Mr. Raymond R. Rick Roth, Jr.,

Roth Farms ...... 249

Witness 34: Mr. Patrick Carroll, Clear Springs . 256

Witness 35: Mr. Chris Spencer, Florida Executive

Office of the Governor ...... 262

Conclusion ...... 270

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1 P-R-O-C-E-E-D-I-N-G-S

2 9:10 a.m.

3 MR. LIGHTHIZER: Well, good morning and

4 thank you, everyone, for joining us here today to

5 discuss trade policies affecting our seasonal

6 fruit and vegetable producers.

7 It is unfortunate that we have been

8 forced to hold today's hearings and next week's

9 hearings virtually instead of in-person in

10 Florida and Georgia as we had originally planned.

11 On behalf of the Trump Administration, I welcome

12 all those participating today and the many more

13 who are watching from home.

14 I will make a few brief remarks and

15 then, Secretary Purdue and Secretary Ross will

16 make some remarks. After that, we will hear from

17 several distinguished members of Congress. We

18 will then receive testimony from the state

19 officials, experts, and affected farmers.

20 We are having these hearings because

21 this administration is concerned about the state

22 of the market for seasonal fruits and vegetables

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1 in the United States. Our farmers are the most

2 productive in the world and they have every right

3 to expect fair trade in their home market.

4 Secretary Purdue and I spent a great

5 deal of time meeting with members of Congress

6 from Florida, Georgia, and other states, hearing

7 about the nature of the problems our farmers

8 face. I would like to commend those members for

9 their diligence in representing the interests of

10 this important sector of our economy.

11 I committed in a letter to Senator

12 Rubio, Senator Scott, Representative Buchanan,

13 and other members of the Florida and Georgia

14 delegation to release a plan articulating

15 remedies necessary to address any trade-

16 distorting practices that may be contributing to

17 unfair prices in the U.S. market and harming our

18 producers.

19 We agreed to have this plan ready by

20 September 1. Secretaries Purdue, Ross, and I are

21 working on this and each will play a significant

22 role in our strategy.

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1 As everyone knows, the health of our

2 agricultural economy is among the highest

3 priorities for President Trump. I look forward

4 to hearing testimony, reviewing the record, and

5 working with all those concerned to come up with

6 a successful, fair plan.

7 In addition to Secretary Purdue and

8 Secretary Ross's, testimony will be taken by

9 Ambassador Doud of USTR, Undersecretary McKinney

10 of the Agriculture Department, and Assistant

11 Secretary Kessler of the Department of Commerce.

12 William Kimmitt of USTR will moderate.

13 Thank you to everyone. And now, I

14 would like to turn it over to Secretary Purdue.

15 SECRETARY PERDUE: Well, thank you,

16 Ambassador Lighthizer, and good morning to all of

17 you. I really regret the fact that we're not

18 able to meet in-person, because I know that I

19 have many friends on these calls and I was

20 looking forward to seeing you all, so we could

21 really talk about this subject in-person.

22 But as Ambassador Lighthizer said,

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1 this is a serious issue for the President. I

2 think all of us on this call understand how pro-

3 American he is and he wants a strong, vibrant

4 agricultural economy. I think he's demonstrated

5 that in so many ways.

6 This is a difficult challenge,

7 frankly, in this particular topic in which you

8 all are involved, and I can assure you, I've told

9 many of you before and I want to tell you again

10 that Ambassador Lighthizer, this was on his Top

11 Five list, on the seasonal fruits and vegetables

12 and the negotiations of USMCA.

13 He kept it there as long as he

14 possibly could. It became very apparent that it

15 was a redline for Mexico at the end and they need

16 negotiation, while we would love to get 100

17 percent of everything we want, this was something

18 that was very difficult to get across the line.

19 But the fact is, he nor Secretary Ross

20 nor I have given up on that, and that's why we

21 want to have this conversation today, to give you

22 an opportunity to tell us and submit comments

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1 about how we can help you all to be more

2 competitive.

3 You know the United States really is

4 focused, so productive in agriculture, we're

5 focused primarily on exports, and that somehow

6 puts you at a disadvantage and we want to know

7 how we can make you more competitive vis-a-vis

8 the Mexican imports that are coming in.

9 We are not a protectionist society in

10 the United States, we've got confidence in our

11 growers, but this is one of those areas that is

12 very troubling for us, very problematic. And

13 Ambassador Lighthizer, Secretary Ross, and I have

14 been working to figure out how we can level the

15 playing field in here.

16 We fully understand the competitive

17 situation that you're in, we recognize that, and

18 we want to know what we can do, aside from

19 closing the borders here. We certainly are doing

20 more in inspections on the sanitary,

21 phytosanitary issues, as was negotiated by

22 Secretary Ross on infection, and we're fulfilling

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1 that.

2 But we've got to get down to the

3 fundamentals of how we can do that from a USTR,

4 US Secretary of Agriculture prospective. We're

5 focusing on more markets overseas, the Japan

6 market, which come in in your season next year,

7 and other places that, even China, for lowering

8 tariffs on blueberries and other fruits and

9 vegetables.

10 Obviously, these are perishable

11 commodities, which are better consumed right here

12 domestically. That's where your challenge is and

13 we need you all to help us figure out how to do

14 that.

15 So, we want to continue to listen and

16 the plan that Ambassador Lighthizer talked about

17 has got to be productive in how we can best

18 understand the real challenges and the

19 fundamental parts of that to make you all feel

20 like you're competitive in that.

21 We want to look at any kind of

22 unfairness and whether it's subsidies, we know

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1 that the labor issue is huge and that's very

2 difficult, obviously, based on the economies of

3 our country and the adverse wage rate that you

4 all have to pay under H-2A versus what Mexico's

5 paying, we know that's fundamental to the issue.

6 But we've got to figure out how we can

7 make our American economy both in the blue -- I

8 know there's a lot of blueberry growers, tomato

9 growers, other vegetable growers here, that we

10 want to do.

11 The challenge, obviously, in the

12 negotiations was, I think as you folks in the

13 Southeast know, we've got people here on this

14 call from the West as well, and unfortunately,

15 there was not unanimity that gave Ambassador

16 Lighthizer a strong stand on which to negotiate,

17 even in the United States.

18 So, we've got to find out where that

19 difference is. Our Western colleagues differ on

20 these opinions and our Southeastern colleagues

21 and growers do as well.

22 So, hopefully we can get some of those

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1 answers and have a proposal that can make you

2 feel that you are fairly treated in this domestic

3 market and competitive and continue doing what

4 you all do best.

5 So, I look forward to hearing your

6 remarks and your comments as we go forward. So,

7 thank you, Ambassador Lighthizer, Secretary Ross,

8 and members of Congress for allowing me to join

9 today.

10 MR. LIGHTHIZER: Thank you very much,

11 Mr. Secretary. And now, I would ask Secretary

12 Ross to make his comments.

13 SECRETARY ROSS: Thank you, Ambassador

14 Lighthizer, for your steadfast commitment and

15 devotion to American producers and American

16 workers, and a warm welcome to the many panelists

17 and witnesses that will testify over the two days

18 of hearings.

19 The amount of interest shown in this

20 hearing by those dedicated to preserving and,

21 indeed, strengthening this essential American

22 industry is an indication of the importance of

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1 domestic food production and our domestic

2 farmers.

3 We're here today because the Trump

4 Administration recognizes the economic importance

5 of this country's seasonal and perishable produce

6 industry.

7 At the Commerce Department, we're

8 acutely aware that U.S. agriculture faces rising

9 foreign competition, particularly from Mexico.

10 In the past ten years, total agricultural imports

11 from Mexico have skyrocketed, increasing almost

12 threefold to $28.3 billion in 2019.

13 Imports of fresh fruits from Mexico,

14 excluding bananas, has increased from $2.3

15 billion in 2010 to $6.9 billion in 2019. Fresh

16 vegetable imports from Mexico have almost doubled

17 over the past decade to $6.3 billion.

18 It's imperative that the U.S.

19 Government listens to the concerns of our growers

20 and at the Commerce Department, we take concerns

21 of unfair trade practices seriously and we use

22 every tool available to counter them whenever and

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1 wherever they exist.

2 In fact, the Trump Administration has

3 already delivered some results for the domestic

4 tomato industry. We did this by successfully

5 leveraging the threat of tariffs.

6 Both the Commerce Department and the

7 USITC investigated alleged dumping. And while

8 the investigation was pending, Commerce imposed a

9 17 percent cash deposit requirement on tomatoes

10 from Mexico. Meanwhile, we negotiated on behalf

11 of the U.S. industry. And ultimately, in

12 September 2019, we finalized the strongest

13 agreement in history protecting U.S. tomato

14 producers.

15 We know that no two crops have exactly

16 the same facts, but we believe that understanding

17 the details of each is the key to finding a

18 solution. Whether it ends up as a result of the

19 process in enforcement or it ends up in

20 negotiations, we really need the facts.

21 In the case of tomatoes, the end

22 result was we established reference prices for

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1 Mexican tomatoes and contained strong monitoring

2 and enforcement provisions, largely carried out

3 by the Department of Agriculture, that included

4 border inspections to prevent the importation of

5 low quality, poor condition tomatoes from Mexico

6 that can have price-suppressive effects on the

7 market.

8 The agreement also closes loopholes

9 that have effectively permitted sales below the

10 prior reference point. That was a victory for

11 American growers and generated $426 million in

12 revenue for Florida tomato farmers in 2019 alone.

13 Since the beginning of the current

14 administration, Commerce has negotiated 281 new

15 antidumping and countervailing duty

16 investigations, a 260 percent increase from the

17 comparable period of the previous administration.

18 We currently administer 531 AD/CVD

19 orders against unfairly traded foreign goods, an

20 all-time high. No other administration has ever

21 come close to this level of trade enforcement

22 activity.

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1 But we rely on American producers,

2 their workers, and their representatives in

3 Congress to alert us to unfair foreign trade

4 policies and unfair pricing in the U.S. market.

5 Over the two days of these hearings,

6 trade enforcement teams from Commerce will listen

7 to the oral testimony and will further study all

8 of your written submissions. We're eager to hear

9 from you about the obstacles you face in your own

10 market and what the administration can do to

11 address them.

12 Thank you again for the many long

13 hours of hard work you do to feed our families

14 with the highest quality food. Now, I turn the

15 platform back over to walk you through the agenda

16 for today's hearing and introduce the panelists.

17 Thank you.

18 MR. LIGHTHIZER: Great. Thank you very

19 much, Secretary Ross. And let me just say that

20 all of us in the administration couldn't have two

21 better people in those enforcement jobs than

22 Secretary Purdue and Secretary Ross, in their

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1 extraordinary work in expanding markets for U.S.

2 agriculture, but also insisting on fair trade in

3 the United States.

4 So, with that, we will turn to our

5 witnesses. Our first witness will be Congressman

6 Vern Buchanan, and we look forward to your

7 testimony, Congressman.

8 REP. BUCHANAN: Can you hear me all

9 right, Ambassador?

10 MR. LIGHTHIZER: Yes, you're coming

11 through. Unfortunately, we can see you also.

12 (Laughter.)

13 REP. BUCHANAN: Okay. Well, thank you

14 for your leadership on this issue, it's a big

15 thing, as you know, in Florida, we've had many

16 discussions about it.

17 My name is Vern Buchanan and I

18 represent Florida's 16th Congressional District.

19 I want to thank you for allowing me the

20 opportunity to address how Mexico's unfair trade

21 practices are harming Florida growers of seasonal

22 fruits and vegetables and affecting their ability

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1 to survive.

2 Since 2000, Mexico has given the

3 Florida fruit and vegetable industry the short

4 end of the stick, because Florida and Mexico

5 share a similar growing season and produce a

6 number of the same fruits and vegetables.

7 Producers have been very hard hit by

8 Mexico's unfair trade practices that have enabled

9 unfairly priced Mexican produce to flood across

10 the borders.

11 While we grow the highest quality

12 produce in the world and can compete with anyone

13 in a global marketplace, our produce industry is

14 struggling against these unfair trade practices.

15 Mexico has systematically eroded the

16 Florida industry's revenues, market share, job

17 numbers, and ultimately, its ability to be

18 competitive.

19 The livelihood of Florida farmers and

20 families they support have been forever altered,

21 with many of the multi -- including many

22 multigenerational families being shuttered for

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1 good.

2 Via the after study confirms that

3 absence effective and timely and lasting relief,

4 jobs and revenues will continue to be lost in

5 high numbers. And with agriculture representing

6 the state's second largest commercial sector, no

7 other industry competes at that level.

8 As the co-chairman of the 29-member

9 delegation, third largest delegation in the

10 country, I can tell you, every member, Democrat

11 and Republican, all 29, including the two

12 Senators, are very committed to making sure

13 something happens here.

14 I know, personally, I'm committed to

15 leveling the playing field for our farmers as one

16 of my top priorities, along, I could honestly,

17 candidly say, all the other members as well.

18 For the last 20 years, from 2000 to

19 2019, Florida has lost $1 to 3 billion each year,

20 $1 to 3 billion for 20 years. The Mexican fruit

21 and vegetable industry has carved out more and

22 more of the U.S. marketplace.

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1 Eighty-five percent of our growers

2 have suffered sizable market share declines over

3 that period, while Mexico sector, in terms of

4 their increase, has been a massive 217 percent.

5 So, we're losing $1 to 3 billion for the last 20

6 years, average, so it's tens of billions of

7 dollars, and they're up 217 percent.

8 The hardworking men and women of

9 Florida that produce the fresh, nutritional

10 produce that Americans consume every day are

11 suffering growing losses as Mexico continues to

12 dramatically increase its market share. We owe

13 it to Americans to provide Florida farmers with

14 the necessary tools to compete in a fair

15 marketplace.

16 In recent years, Mexico exports of

17 bell peppers, tomatoes, watermelons, sweet corn,

18 lettuce, and similar products have enjoyed

19 double-digit annual growth.

20 In fact, just this year, in 2020,

21 Mexico produce shipments have been so

22 substantial, the USDA had to revise its

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1 projection to reflect another $300 million

2 increase of Mexican produce.

3 Florida farmers for the past winter

4 and spring marketing period were forced to plow

5 their crops under and sustained staggering losses

6 as Mexican's competition intensifies and many of

7 our outlets are shutting down.

8 This year's experience serves as a

9 renewed reminder that Mexican's industry aims to

10 continue expanding its control over the U.S. fall

11 and spring produce market, until the Florida

12 industry simply ceases to exist.

13 If this were to happen, our country

14 would have to rely solely on foreign producers to

15 satisfy our fruit and vegetable demand from fall

16 to spring.

17 Mexico unfair trade practices are a

18 direct threat to the produce industry. Florida

19 farmers need to know that we have their back and

20 will do what it takes to save the industry.

21 I, therefore, respectfully urge USTR

22 to launch in the near future a trade action that

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1 can reliably stop these unfair trade practices

2 and enable our Florida producers to compete in

3 U.S. market on a fair and lasting basis. And

4 with that, Mr. Ambassador, I yield back.

5 MR. LIGHTHIZER: Thank you very much,

6 Congressman. I would just testify myself to the

7 diligence that you have had and that Senator

8 Rubio and Senator Scott and Congressman Soto, and

9 I could go right down the list of those who are

10 testifying, have had.

11 Because I know, I've met with you many

12 times, I've talked to you on the phone many times

13 with the other people, we've had group meetings,

14 I know Secretary Purdue has been involved in

15 them, Secretary Ross.

16 So, as I said in my opening statement,

17 we're so grateful for the diligent way you are

18 representing this important part of our U.S.

19 economy.

20 I think our next witness is, there's

21 some technical issue, but is Congressman Soto is

22 our next witness. Thank you very much,

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1 Congressman Buchanan.

2 REP. BUCHANAN: Thank you.

3 REP. SOTO: Good morning and thank you

4 for having me here today. Can you all hear me?

5 MR. LIGHTHIZER: Yes, yes --

6 REP. SOTO: Okay, great.

7 MR. LIGHTHIZER: -- we can.

8 REP. SOTO: Thank you. You said

9 technical issues, so I just wanted to make sure.

10 I'm Congressman Darren Soto, representing the

11 Central Florida area, broadcasting to you live

12 from Kissimmee, Florida.

13 As many of you know, Central Florida

14 is home to cattle, citrus, tomatoes,

15 strawberries, and blueberries. Throughout the

16 agriculture, we have primarily

17 focused on producing winter fruits and vegetables

18 that are first in the market from early winter

19 through early spring. In short, this is our

20 window of opportunity, this is our traditional

21 season.

22 Many discussions with -- I want to

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1 thank U.S. Trade Representative Lighthizer for

2 the many discussions he's had with our delegation

3 and also his commitment to Florida's second

4 largest industry.

5 Over the last 25 years, the issue of

6 seasonality has threatened the very existence of

7 Florida's fruit and vegetable industry. I'll

8 focus my discussions on blueberries,

9 specifically.

10 As many of you many know, the

11 University of Florida, our land-grant college,

12 developed blueberry varieties that grow in our

13 world famous warm climate.

14 This industry has come to prominence

15 over the last 40 years and has become a popular

16 crop for Florida's farmers. And late in the year

17 to early winter, our local farmers roll up their

18 sleeves, cultivate these growth, and produce

19 world class blueberries.

20 So, what's the problem? In short,

21 Mexico growers utilize unfair trade practices,

22 such as government subsidies, cheap labor, and

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1 suspect environmental practices, among other

2 unfair practices, to produce an artificially low

3 priced blueberry.

4 Add Mexico growers' dumping practices,

5 flooding the market with cheap subsidized

6 product, and the result has spelled disaster for

7 Florida's blueberry industry.

8 The economic damage has been

9 particularly acute within the last 15 years. For

10 example, in 2007, Florida growers had nearly one-

11 third of the blueberry market share, while the

12 market share for Mexico growers was negligible.

13 As of 2019, Mexico accounts for nearly 30 percent

14 of the blueberry market and Florida's market

15 share shrunk to about 16 percent.

16 However, market shares don't encompass

17 the entire problem. Price and supply costs are

18 leveraged aggressively by Mexican growers,

19 leaving Florida growers at a distinct

20 disadvantage.

21 Florida and Mexico had near parity for

22 price per flat at about $24 between 2015 to 2019.

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1 However, sometimes, Mexico's pricing can be as

2 low as $10 to $15 per flat, for the reasons

3 discussed above, the unfair trade practices

4 already outlined.

5 These prices force Florida to charge

6 similar prices during the same growing season,

7 essentially setting an artificial floor, severely

8 reducing revenues, profitability, and long-term

9 viability.

10 For example, the average number of

11 pounds exported from Mexico between 2015 and 2019

12 was 46.8 million pounds, while Florida produced

13 an average of 20.4 million pounds. Coupled with

14 lower flat prices and fixed shipping costs, this

15 has been a disaster for Florida blueberry

16 growers.

17 Furthermore, under previous and

18 current trade policies, Florida specialty crop

19 farmers, especially seasonal and perishable

20 farmers, do not have any current legal remedy to

21 challenge these overly aggressive tactics.

22 This is where we think we can do

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1 better, by giving them either or by

2 monitoring by the USTR, to actively police these

3 areas, could make a huge difference in the long

4 run. These aggressive tactics have forced our

5 local farmers to choose between their

6 multigenerational farms and their livelihood.

7 My constituent growers have

8 consistently told me over my 13 years as a state

9 legislator, combined with my Congressional

10 career, that they can compete with anyone, as

11 long as their hands aren't tied behind their

12 backs, as long as it's a fair and level playing

13 field.

14 These unfair trade practices and a

15 lack of legal remedy do just do this, without

16 continued oversight of any Mexican grower bad

17 actors, the robust Florida seasonal produce

18 industry will be eliminated forever.

19 Therefore, in order to save the

20 specialty crop industry and Florida's food

21 producers, including blueberry growers, we

22 respectfully urge the USTR's full and fair

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1 consideration of an investigation into any

2 possible Mexican trade practices and policies

3 that are burdening and restricting U.S. commerce

4 under the Trade Act of 1974.

5 We also ask you all to look to the

6 Defending Domestic Produce Production Act,

7 H.R.101, a bipartisan bill that grants standing

8 to those who are in the seasonal and perishable

9 producer industry, to bring important relief

10 based upon unfair trade practices and harm that

11 they uniquely suffer during their discrete

12 seasonal periods.

13 These mechanisms would ensure that

14 they have the unique ability to bring claims

15 based upon these violations during their seasonal

16 and perishable product windows.

17 And with that, I just want to thank

18 Trade Representative Lighthizer once again and

19 your esteemed team for the great work you did on

20 USMCA and let's work together to see if we can

21 improve it from there. Thank you.

22 MR. LIGHTHIZER: Great. Thank you very

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1 much, Congressman, we appreciate the comments and

2 we will certainly consider your testimony very

3 heavily.

4 Our next witness is Senator Rubio, who

5 I believe is hooked up. Senator, you have the

6 floor.

7 SEN. RUBIO: Yes, can you hear me?

8 Thank you. I'm sorry about that, I tried to do

9 that video link, but I guess I needed to down the

10 app, I was having trouble with it. But I hope

11 you can hear me fine.

12 And I want to thank you Ambassador and

13 Secretary Purdue and Secretary Ross for putting

14 together this important hearing and for the

15 opportunity you've given all of us to be on this

16 call to advocate on behalf of our constituents

17 and from my perspective and Senator Scott's, our

18 home state.

19 And I think I can say on behalf of

20 Florida and all the growers, we want to thank you

21 for the serious and strong attention that you're

22 paying to the harm that Florida seasonal growers

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1 are suffering from, I don't think it can be

2 called anything but unreasonable trade-distorting

3 practices on the part of Mexico.

4 And you're here, let me just say this,

5 I know you're here because you respect these

6 growers. And for the people of Florida, these

7 growers and the people they employ, the people

8 they serve, and I believe the people of this

9 country that depend on these growers for fresh

10 produce, especially during the winter months,

11 this is a really important topic.

12 And so, like I said, I wanted to begin

13 by expressing my gratitude for giving them the

14 respect I believe that they deserve.

15 I also want to acknowledge that you're

16 here because you made a promise to us that you

17 would hold these hearings and I thank you for

18 keeping that. You made it publicly, you made it

19 privately, that this would be examined, and today

20 is part of keeping that promise and we're

21 grateful for that.

22 So, as I'm sure you're all aware, as

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1 part of the materials submitted to you for the

2 testimony you'll hear today, Florida is obviously

3 the country's leader in producing seasonal

4 products, such as the fresh tomatoes and squash,

5 et cetera. It's second in producing other

6 seasonal and perishable produce, think bell

7 peppers, strawberries, and many other things.

8 And of course, I'm biased, but I think

9 our produce, we produce the best fruit and

10 vegetables in the country. And during the winter

11 and spring, in particular, when other producers

12 are not yet harvesting, our South Florida growers

13 are feeding more than 150 million people.

14 So, as you can see, this industry

15 really has a very viable argument to make that

16 they're critical to our national food supply, and

17 I think we have learned here over the last few

18 months that the ability to provide for ourselves,

19 especially in a time of great need, is something

20 that, unfortunately, over the previous years,

21 administrations in both parties have neglected,

22 and I'm glad to see this administration takes

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1 seriously.

2 So, you will hear from those who are

3 impacted directly. You'll hear about over how

4 the last 20 years, their ability of these growers

5 to provide for the nation has been eroding and

6 it's been due in large part to unfair pricing,

7 coming from Mexico.

8 Unlike growers in other parts of the

9 country, Mexico's growers don't share our

10 seasons.

11 So, I want to -- there's a quote that

12 I think you have from the Florida Fruit &

13 Vegetable submission to you. It talks about how

14 in 2009, our fruit and vegetable farming sector

15 contributed 39,000 jobs, over $6 billion to our

16 economy.

17 By 2018, the numbers for the sector,

18 while still very important, had tumbled to 27,000

19 jobs and down to half, $3.2 billion to our

20 economy. And these losses perfectly correspond

21 with these radical increases in Mexican produce

22 shipments and Mexican market share during the

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1 same period of time.

2 And these imported products are priced

3 unfairly low and it's largely due to the fact

4 that these growers in Mexico are receiving

5 significant subsidies, that are provided directly

6 to their industries.

7 These subsidies, which are directed to

8 capitalizing these growers and to directly

9 enhancing their ability to export and to make

10 them competitive and dominant in the export field

11 is over 200 million annually.

12 If our growers had 200 million

13 annually of direct government assistance, they

14 would be able to compete, but they don't, because

15 we believe in fairness and freedom, in terms of

16 the trade situation, but that's not what Mexico's

17 practicing.

18 And so, this is not a matter of

19 Florida growers needing to adjust to a more

20 competitive global market, or even some failure

21 on their part to modernize.

22 This is simply a matter of the fact

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1 that these growers and Florida produce is in the

2 direct crosshairs of these unfair trade

3 practices. They are, in essence, deliberately

4 trying to put them out of business by heavily

5 subsidizing the domestic industry inside of

6 Mexico.

7 And you think about what's happened

8 during the pandemic, as I said, it's been even

9 harder on the growers, they've been slammed by

10 it. Their economic maintain the course

11 exacerbated by the same unreasonable and trade-

12 distorting trade practices that have been harming

13 them for many years.

14 And the Mexican market share is

15 meaningfully up in 2020, relative to the same

16 month last year. Meanwhile, the subsidy activity

17 is up in 2020 as well, demonstrating that even a

18 global emergency is not going to stop this

19 assault on our seasonal produce.

20 They are being targeted for

21 elimination by these practices, that's what

22 they're trying to do.

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1 And by the way, once that happens,

2 then I predict, as market conditions generally

3 behave, once you kind of corner the market, then

4 you can price it at any time you want. And so,

5 anybody arguing that this is good for American

6 consumers, because of lower prices, that's only

7 until there's no competition left.

8 So, I believe that as we turn towards

9 economic recovery from the pandemic, our Florida

10 producers, they desperately need this problem to

11 be addressed, to have any hope of sharing in that

12 recovery, if we even hope to have an industry in

13 five, seven, ten years.

14 All the seasonal produce growers in

15 the Southeast are hurting and they require real

16 help. And here's -- what we basically are asking

17 for is fair trade with our neighbors, nothing

18 more, nothing less.

19 Again, I want to thank you for your

20 attention to this issue and I'd also like to

21 remind you that there's nothing less than real,

22 effective, timely, enforceable relief that really

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1 is suitable for the particular needs of these

2 growers.

3 The remedy, in my view, and it serves

4 to see that best fits that description is a 301

5 action. If another remedy is proposed, it would

6 have to meet the same standards of real,

7 effective, timely, enforceable, and industry

8 appropriate relief in order to be meaningful.

9 The USMCA, I think the administration

10 needs to be commended, it was a victory for our

11 economy in general. But -- and I do believe that

12 it puts us on a more even playing field,

13 generally speaking, with regards to protecting

14 American workers and promoting opportunities for

15 dignified work, and it strengthens our

16 relationships with our neighbors in Canada and

17 Mexico.

18 However, as I said at the time and I

19 repeat now, Florida growers were not protected by

20 this agreement. It may be good for the overall

21 economy, but for this important industry, they're

22 not protected. In fact, I could argue that they

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1 were sort of left out of the agreement.

2 And as you guys have assured us on

3 multiple occasions that that situation would not

4 be the final word on this, that the livelihood of

5 Florida growers would not be one of the embedded

6 price tags of the USMCA.

7 So, we're truly hoping that that can

8 be followed up by some action that can help save

9 and support an industry.

10 And again, look, I want to thank you

11 all for inviting me to participate, for hosting

12 this hearing. I know we've been waiting to have

13 it, and through no fault of anybody on this call,

14 have been delayed, but I'm glad we were able to

15 get it off the ground and I'm grateful that

16 you've given me the opportunity today to have my

17 voice heard on it. So, thank you again for the

18 chance to be a part of it.

19 MR. LIGHTHIZER: Thank you very much,

20 Senator, for your testimony. We'll certainly

21 take it under consideration. Thank you also for

22 your steadfastly representing this important part

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1 of the U.S. economy and engaging with us so often

2 on it.

3 Our next witness is Congressman

4 Steube. Congressman, you're on the screen and

5 you have the floor.

6 REP. STEUBE: Thank you, sir. I'm Greg

7 Steube and I represent Florida's 17th

8 Congressional District, an area that represents

9 many of Florida's fruit and vegetable producers,

10 one of Florida's largest agricultural districts.

11 Thank you for the time and taking the

12 time to hear the background and information on

13 crucial issues that deeply affect all Americans.

14 As you know, the entire Florida

15 delegation signed the letter in July, led by my

16 team which requested that your agency hold these

17 hearings and continue addressing the unfair

18 Mexican trade practices that have severely harmed

19 the Florida produce industry for the last 20

20 years.

21 I greatly appreciate USTR's commitment

22 to addressing the issue and urge USTR to take

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1 actions immediately that will provide a

2 sustainable, long-term solution.

3 Seasonable produce is vital to the

4 state of Florida, which ranks as the largest

5 producer of many seasonable and perishable

6 products in the country.

7 The Florida fruit and vegetable

8 industry is especially vital to the health of my

9 Congressional district, as I'm proud to represent

10 the largest citrus producing district in the

11 nation and many other growers of nutritious

12 seasonal produce.

13 Although our state produces many of

14 the same crops as Mexico, the imbalance of the

15 market landscape continues as unending stream of

16 Mexican produce floods our U.S. markets at prices

17 and in volumes that Florida farmers simply cannot

18 compete with.

19 For too long, Florida farmers of fresh

20 produce have suffered from Mexico's unreasonable

21 trade-distorting practices. Over the past ten

22 years, for example, Mexico increased imports to

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1 the U.S. by 551 percent, creating

2 disproportionately hard hitting impacts to

3 Florida and Florida's economy.

4 From 2000 to 2019, we lost upwards of

5 200 million in tax revenue for our state's

6 economy and 1.1 to 1.2 billion in sales and

7 nearly 40,000 Florida jobs, as a result of the

8 Florida produce industry's dwindling market

9 share.

10 Of course, as you know, this hasn't

11 been earned fairly. Mexico's government heavily

12 subsidizes virtually all aspects of its specialty

13 crop production, amounting to an average of 200

14 million per year.

15 Program subsidies continued to surge

16 aggressively each year. As a result, produce is

17 priced artificially low and floods the market

18 during the same market window for Florida

19 growers.

20 Because of this, Mexico is now the

21 largest exporter of fruits and vegetables to the

22 U.S. market during Florida's winter growing

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1 season. This has given some Florida farmers no

2 choice but to shut down, since there's no trade

3 mechanism available to combat these unreasonable

4 practices that are systematically taking over

5 U.S. markets.

6 If we lose Florida farmers, the U.S.

7 could be forced to rely solely on foreign produce

8 imports to feed Americans during the fall,

9 winter, and spring months, which I think would be

10 disastrous on a lot of different levels, not just

11 for the impact that it would have on our

12 communities, but the impact it would have on our

13 national security.

14 With the increase of Mexican imports

15 seen during the onset of the COVID-19 pandemic,

16 the Florida industry's level of concern and

17 frustration over Mexico's unfair fruit and

18 vegetable practices is at an all-time high.

19 From January through April of this

20 year, when so many of our Florida growers were

21 forced to plow their crops under, the Mexican

22 produce industry continued to increase its U.S.

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1 market share by 17 percent versus the same period

2 of 2019, and often at record low prices.

3 With Mexico's unfair trade practices

4 in this industry continuing at a rapid pace, our

5 Florida growers are counting on your plan to give

6 them relief and hope for the future of their

7 businesses.

8 A timely trade remedy is needed to

9 help save our produce sectors in Florida and the

10 largest Southeast and Florida farmers deserve the

11 right to fair trade, like other U.S. sectors of

12 the economy.

13 I appreciate your candor and

14 willingness to hear our concerns regarding the

15 survival of this great American industry so vital

16 to our nation's food supply, economy, and my

17 Congressional district.

18 I respectfully urge the USTR to

19 investigate Mexico's unfair trade practices and

20 subsidy policies under Section 301 of the Trade

21 Act of 1974, or consider other remedies that will

22 give Florida farmers the ability to fairly

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1 compete in their own marketplace.

2 And I greatly appreciate you having

3 this hearing today. I yield back.

4 MR. LIGHTHIZER: Thank you very much,

5 Congressman. We appreciate your testimony and

6 we'll certainly take it under consideration.

7 Our next witness is Congressman Spano.

8 Congressman, are you there? You are, you're on

9 the screen.

10 REP. SPANO: Yes, yes, yes, thank you.

11 Good morning and thank you so much for taking the

12 time to meet today to discuss one of the most

13 important issues for me, for my district, and for

14 the entire state of Florida, I would argue.

15 I would also like to thank the members

16 of the panel today for not only attending the

17 hearing, but also for holding the hearing in my

18 district, initially it was scheduled to be in

19 Plant City, but now have had to do it virtually,

20 but grateful that that was initially scheduled

21 here.

22 As many of you know, Plant City has a

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1 very, very rich history growing strawberries,

2 dating back to the mid-18th century. Mid-1800s,

3 I should say.

4 The warm Florida climate allowed our

5 ancestors to grown strawberries in the winter

6 months, which caused our town, Plant City, to

7 bloom, and it put us on the map.

8 Today, our hardworking growers plant

9 more than 10,000 acres of strawberries every

10 year, which bring in hundreds of millions of

11 dollars to our community.

12 Through their persistent hard work and

13 dedication, Plant City is now known as the winter

14 strawberry capital of the world and it produces

15 over three-quarters of all winter strawberries

16 grown in the United States.

17 We're currently proud of this history

18 and it continues to be a vital part of our

19 culture. Plant City has held an annual

20 strawberry festival since 1930, which today

21 attracts thousands of visitors from around the

22 country.

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1 And last year, we were honored to host

2 Ambassador Doud at the festival, to showcase how

3 vital strawberries are to our community. Sadly,

4 our growers, their families, and our way of life

5 in Plant City are under siege.

6 For years, the Mexican government has

7 been actively subsidizing Mexican growers,

8 permitting them to grow below-cost produce, and

9 then dumping those cheap fruits and vegetables

10 into the United States.

11 These one-sided trade practices place

12 our growers in an unwinnable position and are

13 slowly pushing Plant City strawberries out of the

14 business altogether.

15 This situation is clearly borne out by

16 the data. Since 2000, Mexico has been financing

17 billions of dollars in agriculture subsidies to

18 pay for equipment and technology that our growers

19 must supply for themselves.

20 For protected fruits and vegetables,

21 such as strawberries, the Mexican government

22 typically covers 50 percent of the cost of every

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1 project. These subsidies, coupled with lower

2 cost labor, have resulted in dramatic changes in

3 our agricultural economy.

4 Since 2000, the amount of land in

5 Mexico used for protected fruits and vegetables

6 has soared from approximately 300 acres to

7 130,000 acres.

8 This has caused the value of Mexican

9 produce shipped to the United States to increase

10 by more than 500 percent and the value of Mexican

11 strawberries imported into the United States to

12 grow by more than 1600 percent.

13 This growth, caused directly by

14 subsidies from the Mexican government, comes at

15 the expense of growers in Plant City and across

16 Florida.

17 In the last 20 years, Florida growers

18 have lost between $1.1 and 2.2 billion in sales,

19 leading to nearly 40,000 lost jobs in Florida.

20 And in strawberries alone, our growers have

21 suffered hundreds of millions in losses in sales

22 and a 36 percent reduction in market share in the

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1 U.S. since 2000.

2 Sadly, it appears Mexico plans to

3 double-down on these unfair trade practices.

4 Subsidies for strawberries and other produce have

5 increased in 2019 and 2020.

6 Mexico's current President, Lopez

7 Obrador, has openly stated he plans to expand

8 subsidies to Mexican producers and plant,

9 quote/unquote, one billion hectares of fruit and

10 timber in Mexico.

11 Furthermore, in addition to enacting

12 broad subsidies, Mexico is specifically targeting

13 Florida strawberry growers.

14 Normally, the price of produce

15 increases the farther it is shipped. So, it

16 stands to reason that produce shipped from

17 Western Mexico, where most of their crop is

18 harvested, should reflect the price of the

19 journey.

20 However, the data reveals the

21 opposite. Strawberries shipped Mexico to

22 California average $17 a case, whereas

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1 strawberries shipped from Mexico to Florida

2 average $12 to 15 per case.

3 This shows a conscious effort to drive

4 Plant City growers out of business. If these

5 trends continue, our growers are expected to

6 continue suffering hundreds of millions of

7 dollars in losses.

8 The situation is truly dire and if a

9 solution is not provided and fair trade practices

10 restored, the strawberry industry in Plant City

11 could be completely eradicated within just a few

12 years.

13 The testimonies from my colleagues

14 that will be presented today and the data

15 submitted for the record duly reveal the

16 emergency my growers face. However, the growers

17 in Plant City and across Florida can tell this

18 story better than I or the data ever could.

19 Today, we're here to put faces to

20 figures, to show the beyond the data of the harm

21 that the Mexican government is doing to our

22 community and to emphasize the need for immediate

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1 and effective relief.

2 Thank you again for your time. I

3 yield back.

4 MR. LIGHTHIZER: Great. Thank you very

5 much, Congressman. We appreciate that. We will

6 certainly take your testimony into consideration.

7 I'm told that right now, there is a

8 couple of witnesses that are having technical

9 issues. I think we will pause for about three or

10 four minutes and give them a chance to hook up

11 again.

12 (Whereupon, the above-entitled matter

13 went off the record at 9:53 a.m. and resumed at

14 10:05 a.m.)

15 CHAIR KIMMITT: As you may have

16 noticed, we're ahead of schedule and appreciate

17 all the participants' flexibility, particularly

18 as we're also dealing with technical issues. I'd

19 now like to welcome our next witness,

20 Commissioner Nikki Fried from the Florida

21 Department of Agriculture and Consumer Services.

22 MS. FRIED: Good morning. Can you all

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1 hear me? Yes.

2 CHAIR KIMMITT: Yes.

3 MS. FRIED: Good morning. Ambassador

4 Lighthizer, Secretary Perdue, Secretary Ross, and

5 members of the Hearing Committee, as Florida's

6 Commissioner of Agriculture, I thank you for the

7 opportunity to address the urgent need for timely

8 and effective remedies to protect U.S. seasonal

9 producers from unfair Mexican trade practices

10 that continue to devastate our domestic

11 agriculture industry. With $137 billion economic

12 impact, agriculture is Florida's second largest

13 industry and first during times of economic

14 downturns, like we are currently experiencing due

15 to COVID-19.

16 Our 47,000 farms support over 2

17 million hardworking men and women, keeping our

18 food supply strong and our nation's families fed.

19 Our farmers are resilient, throughout challenges

20 like hurricanes, droughts, wildfires, invasive

21 species, trade wars, and now global pandemics.

22 Our farmers also suffer from increased and unfair

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1 foreign competition with the USMCA's entry into

2 force on July 1st.

3 For 25 years, NAFTA allowed domestic

4 markets to be flooded with cheap produce from

5 Mexico, due to its government's agricultural

6 subsidies as well as lower labor costs and safety

7 standards. Domestic producers have been hopeful

8 that these unfair practices would be addressed

9 with the renegotiation of NAFTA. But they found

10 themselves on the cutting floor as the USMCA was

11 finalized.

12 Our seasonal producers cannot afford

13 to operate while these unfair trade practices

14 continue unabated. I am proud to speak out today

15 on behalf of Florida's farmers and to implore the

16 administration take immediate action to provide

17 remedies that are both effective and timely to

18 protect them from further harm.

19 Following the USMCA's entry into

20 force, I shared with Ambassador Lighthizer the

21 study you have before you today that our

22 department conducted on the impact of Mexico's

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1 agriculture exports on Florida agriculture since

2 2000. Dan Sleep from our department will be

3 speaking to this report in greater detail during

4 his testimony in just a few minutes. And while

5 we know these unfair trade practices impact

6 farmers beyond Florida, from Georgia to Mexico to

7 Washington state, we wanted to provide the

8 Administration with a snapshot of the devastating

9 impact they have had in our state.

10 One cannot deny the harm being caused

11 when faced with the data. But I implore the

12 members of this hearing committee and the

13 administration to see these figures not only as

14 numbers on a chart but as an attack on American's

15 livelihood. They are generations of family

16 businesses, jobs sustaining local communities,

17 and food on the plates of our children.

18 I am thankful that the administration

19 will have the opportunity to hear directly from

20 the farmers, families, and communities that are

21 suffering due to lack of access to unfair trade

22 remedies, first under NAFTA and now under USMCA.

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1 After seeing the numbers and hearing their

2 stories, there can be no doubt as to the

3 seriousness of this issue and a dire need for

4 this administration to take immediate action

5 under its existing trade authority to stem the

6 losses with our domestic seasonal produce

7 industry. With the USMCA now in full force, the

8 clock is ticking for your agencies to help us

9 protect seasonal producers across the United

10 States.

11 The need for timely and effective

12 remedies is even more urgent now, as these same

13 growers continue to suffer steep losses due to

14 COVID-19 disturbances. The Florida Department of

15 Agriculture and Consumer Services stands ready to

16 assist our federal and industry partners as we

17 move forward towards long overdue solutions.

18 Florida remains united in fighting for fairness

19 for all of our farmers. Thank you again for this

20 opportunity to testify and for giving a voice to

21 our producers.

22 MR. DOUD: Thank you, Commissioner.

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1 We have spoken over the phone before but not met

2 face to face. I'm Ambassador Greg Doud, Chief

3 Agriculture Negotiator at USTR. I was wondering

4 with regard to your testimony and that of Mr.

5 Sleep's, are you available to answer a question

6 or two here or would you like to pose those to

7 Mr. Sleep?

8 MS. FRIED: You can ask me any

9 questions.

10 MR. DOUD: Did she -- Commissioner,

11 did you hear my question? Apparently, she can't

12 hear me. Commissioner, can you hear me?

13 MS. FRIED: I can't hear anything.

14 MR. DOUD: She can't hear me. Okay.

15 MS. FRIED: I can't hear anything.

16 Sorry.

17 MR. DOUD: I'm trying. Okay.

18 MS. FRIED: I don't know if it's on

19 your end or ours.

20 MR. DOUD: I don't know either. Let's

21 see. Can you hear me now, Commissioner? Still

22 no luck. Under Secretary McKinney, can you hear

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1 me? I'm looking at you here.

2 MR. McKINNEY: Yes, I can hear you,

3 Ambassador.

4 MS. FRIED: If you're trying to ask us

5 questions, I can't hear anything. I'm so sorry.

6 MR. DOUD: Okay, okay. No problem,

7 Commissioner. We'll go to -- onto our next --

8 right. Well, but thank you, Commissioner Fried,

9 and apologies for the technical difficulties. We

10 might throughout the day have follow-up questions

11 for additional witnesses who are providing

12 testimony.

13 With that, I'd like to welcome Mr. Dan

14 Sleep from the Florida Department of Agriculture

15 and Consumer Services.

16 MR. SLEEP: Thank you, and good

17 morning. It's great to be here. I appreciate

18 today's opportunity to discuss how NAFTA and the

19 USMCA have impacted Florida agriculture

20 producers. For the last 20 years, much of my

21 focus has been conducted marketing operations for

22 our division, producing research, and quantifying

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1 impacts of our domestic and international

2 programs, as well as examining adverse events

3 that impact our farmers, ranging from hurricanes,

4 freezes, product recalls, and most recently the

5 competitive trade environment.

6 During 2017, our bureau implemented an

7 advanced database and analytics capability, which

8 allowed us for the first time to examine large

9 data sets of commodity movement and pricing

10 information and organize these into a series of

11 comparative historical graphs. Many of you have

12 copies of that report today. We essentially

13 imported the entirety of the USDA's movement

14 data, covering more than two dozen fresh

15 specialty commodities from every country in the

16 world with a record and every U.S. state.

17 We do this to include every piece of

18 data from every day for more than 20 years. Our

19 team then began to research how Florida had

20 faired during NAFTA, beginning with available

21 records from the year 2000 through 2016. Today,

22 we've added to our findings and recently

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1 completed work on our report examining this

2 information and the change in conditions through

3 2019.

4 Long term from 2000 to 2019, Florida

5 farmers have lost 40 percent of their starting

6 market share position, while Mexico gained 217

7 percent. That isn't just a percentage. That

8 number represents minimally $1 to $2 billion of

9 Florida economic growth, over 100 million in

10 operating revenues for state, county, and cities,

11 and countless business and personal opportunities

12 unfairly lost.

13 In 2000, Florida's specialty

14 commodities were valued at about $1 billion more

15 than Mexican specialty crop imports to the entire

16 United States. However, Florida's cash receipts

17 declined from 3.3 billion in 2000 to 2.4 billion

18 in 2018, a decrease of 28 percent. While Mexico

19 continued to expand from 2.3 billion in 2000 to

20 13.5 billion in '18, and most recently 15 billion

21 in 2019, and extraordinary 550 percent expansion.

22 While this was occurring in the last

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1 year, our team of designers and analytics built

2 the capability to track specialty crop pricing in

3 terminal markets across the United States. This

4 gave us insights for the first time to unfair

5 pricing conditions, and that can be found in the

6 report that we've given you today. Throughout

7 this research project, it has been fair too easy

8 to identify the negative impacts on our

9 industries and practices, which appear to

10 restrict and reduce the U.S. producer's ability

11 to remain in business.

12 We are here today to offer our support

13 and findings to help the administration better

14 understand how the competitive environment has

15 devolved during NAFTA and the USMCA. Our goal is

16 simple, to provide the most current data analysis

17 so that policymakers can craft an actable trade

18 agreement to help secure the future of Florida

19 agriculture. Thank you very much.

20 MR. DOUD: Thank you, Mr. Sleep. We

21 have time for some questions here from all of us.

22 And the first question I wanted to ask you, and

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1 we'll gang up on you since we didn't get to ask a

2 question of Commissioner Fried.

3 So you mentioned this analytical tool,

4 and I think that's very interesting. Could you

5 give us a little further explanation or expansion

6 on this tool and how you see the imports of

7 seasonal products impacting markets in the

8 southeastern part of the United States using that

9 tool?

10 MR. SLEEP: Yes. I think first I

11 would say that without one of the finest

12 databases in the country, in the world perhaps,

13 the USDA's Movement and Pricing Databases and the

14 dedicated individuals there that maintain that,

15 we wouldn't be able to do any of this. So we

16 basically access those databases, import them

17 into a system, an analytics platform, basically a

18 computing tool called Einstein Analytics. And

19 this helps us to organize that data in ways that

20 are easy for us to look at.

21 The things that would be, let us say,

22 almost impossible for me to do with a small

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1 staff, even though they're dedicated. The small

2 staff that I would have would take hundreds, even

3 thousands of hours to do, we can do in a matter

4 of minutes sometimes and then spend our time

5 actually looking at and understanding how to

6 design and give those reports to you. And we've

7 done that today. Does that answer your question?

8 MR. DOUD: Yes, thank you. I'll turn

9 it over to Under Secretary McKinney for a moment.

10 MR. McKINNEY: Hi, Dan. And

11 Commissioner, it was good to hear your comments

12 as well. Am I coming through okay?

13 MR. SLEEP: You are, sir.

14 MR. McKINNEY: Great. First of all,

15 I think it's implied we'll be getting a copy of

16 that report. And I'm very interested in making

17 sure all of the terrific economists and analysts

18 here at USDA can take a look at that and fully

19 digest it. So I'll just presume that's the case.

20 The second point is, how comprehensive

21 is it? For example, we hear mostly about fruits

22 and some vegetables. You and Florida also have a

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1 fair amount of oranges, mostly for juice. Is it

2 a comprehensive report that transcends virtually

3 all of your crops, seasonal, perishable there in

4 Florida?

5 MR. SLEEP: In the short response,

6 yes, any of the crops that are tracked in the

7 USDA movement report, and there's about, I think,

8 36 or so and around 25 or plus of Florida

9 commodities. And that's everything from

10 blueberries and strawberries to oranges and

11 tangelos. So anything that's in there that's

12 being tracked in a consistent fashion, which they

13 have been, we can look at those and understand

14 our relationship to Mexican producers, to those

15 exports coming in, and any other country that you

16 may want to look at. Mexico continues to be the

17 primary competitor --

18 (Simultaneous speaking.)

19 MR. McKINNEY: And how far back do you

20 analyze the data? I'm guessing it's some number

21 of years. But just how far back does this study

22 go?

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1 MR. SLEEP: The data that is in the

2 main report, the USMCA report, goes back to the

3 year 2000. That's when the first available data

4 is, and it comes forward. And then we have

5 broken that out looking at different years,

6 sometimes a few years apart, so that we can

7 understand what's happened in the last three or

8 four years, and we can quickly assemble that and

9 look at just about any time period we would want

10 or the industry would need.

11 MR. McKINNEY: Thank you.

12 MR. SLEEP: Very welcome, sir.

13 CHAIR KIMMITT: I think we have time

14 for one more question if Assistant Secretary

15 Kessler has one.

16 MR. KESSLER: Yes. Well, thank you

17 first of all, Mr. Sleep and Commissioner Fried

18 for your testimony. I appreciate it and very

19 much look forward to reading the report. I

20 wanted to ask about the fact that you identified

21 a variety of adverse factors that have

22 unfortunately affected Florida agriculture over

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1 the years.

2 You mentioned hurricanes and freezes

3 and product recalls and the competitive trade

4 environment. I'm curious. If there's -- if you

5 think there's a way or maybe in the report

6 there's a way that we can isolate the effects of

7 other countries' unfair trade practices on

8 Florida agriculture, or how you would think about

9 that and what data we should be looking to as we

10 think about that question.

11 MR. SLEEP: We've begun to examine the

12 relationships of other secondary events. I guess

13 for me and my team, we often look at those as

14 short term. For instance, COVID is a single

15 event perhaps with a three to five-month

16 duration. And so we try to isolate that. We

17 hope, of course, like everybody, that goes away

18 and it never occurs again.

19 But the unfair pricing from Mexico

20 does not go away. It continues to be observable.

21 When we look at the pricing data, we can actually

22 look at, and did in another study that you'll

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1 have a copy of in January-April time frame. In

2 2020, we looked at to see -- for instance, to see

3 if any product showed up in the market under the

4 price of $5.50.

5 For me, I was just looking to see if

6 anything would surface. Unfortunately, over

7 1,200 instances of that were identifiable in that

8 report, and that's just in that four-month

9 period. And in fact, when we look at a $5.50

10 hypothetical price, none of those products -- and

11 that's only on the Eastern Seaboard of the U.S.,

12 is that none of those products should've been

13 delivered in those terminal markets for $5.50

14 because it costs about that to ship it from

15 Mexico to those places. So that's of concern.

16 I think that the instrument that we've

17 developed, the analytics, capabilities allow us

18 to for the first time, as administrators and

19 policymakers, to look at that and go, is that a

20 fair price? Can we isolate that? So I guess to

21 answer your question, I hope I did, most of the

22 things that I have looked at over the years,

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1 hurricanes, they come and they go. Mexico unfair

2 pricing just does not.

3 CHAIR KIMMITT: Thank you, Mr. Sleep.

4 MR. SLEEP: You're welcome.

5 CHAIR KIMMITT: I'd now like to

6 welcome our next witness, Congressman Ted Yoho of

7 Florida.

8 REP. YOHO: Good morning, everybody.

9 I assume you can hear me all right.

10 MR. DOUD: Yes, Congressman.

11 REP. YOHO: I appreciate you guys

12 taking this time. Just for the record, my name

13 is Ted Yoho and I'm honored to represent

14 Florida's 3rd Congressional District. And I want

15 to thank the U.S. Trade Representative for

16 hosting today's roundtable to address the trade-

17 distorting policies that are harming our Florida

18 farmers. And we've talked about this before, and

19 I appreciate you following through on your

20 commitment.

21 As you know, agriculture is the second

22 largest industry in Florida. Our state provides

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1 a thriving environment for producers, an

2 abundance of the world's highest quality

3 nutritious fruits and vegetables. As one of

4 three Floridians on the House Ag Committee, and

5 working directly with farmers and ranchers since

6 I was at age 15, I hate to tell you that was 50

7 years ago, I know that the producers in my

8 district and across the state -- because I've

9 traveled the state, know it from Homestead,

10 Florida all the way up to the Panhandle, are

11 dedicated to producing the highest quality food

12 for Americans across the country and a large part

13 of the world.

14 Florida ranks number one in so many

15 different things from citrus to watermelons to

16 sweet corn and the list goes on and on.

17 Moreover, I'm confident that our Florida

18 producers can compete with farmers across the

19 world so long as there is an even playing field.

20 And that's what this call is about. And

21 unfortunately, that is currently not the case.

22 Florida farmers grow seasonal and

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1 perishable fruits and vegetables in the fall,

2 winter, and spring months. High volumes of

3 Mexican fruits and vegetables flood into the U.S.

4 markets in the same time frame and at a price

5 Florida farmers simply can't compete with. And

6 those things have been discussed, the labor

7 issues, environmental standards, and the cost of

8 production and the subsidies from the Mexican

9 government which we have a report from the

10 University of Florida that we can reference and

11 send to you if you haven't seen it. I think,

12 Ted, we've already sent it to you.

13 The issue has been going on for more

14 than 20 years, since NAFTA went into force. The

15 seriousness of the seasonality problem has been

16 recognized before, but no action has been taken

17 other than the suspension agreement on tomatoes,

18 which took over 23 years. And during that time,

19 we saw Florida go from 300 producers in tomatoes,

20 and 65 percent of the United States' crop of

21 tomatoes, dwindle down to less than five big

22 producers in Florida and less than 30 percent of

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1 the tomato crops.

2 While we were waiting for the

3 suspension agreement to correct this problem, the

4 end result is it killed the Florida tomato

5 growers. As a result, Florida farmers have been

6 left to pay the price. Our producers need

7 immediate relief, and I stress immediate relief

8 before the industry is completely decimated.

9 Mexico has been flooding the U.S. with

10 crops, including blueberries, squash, peppers,

11 watermelon, and more at an alarming rate, at

12 unfairly low prices. And there is a multitude of

13 factors keeping their prices low that have been

14 discussed already and I'll be happy to answer

15 questions on those.

16 Additionally, the Mexican produce

17 industry accession in the U.S. market has not

18 been earned fairly. The Mexican specialty crop

19 production is subsidized by their government

20 amounting to an average of $200 million per year.

21 As a result, Florida produce industry market

22 share declined from 2000 --

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1 MR. DOUD: Congressman?

2 REP. YOHO: -- to 2019 -- yes?

3 MR. DOUD: Congressman, we are having

4 technical difficulties here. You've kind of

5 faded away on us.

6 REP. YOHO: Is that better?

7 MR. DOUD: I'm not sure if there's a

8 way to bring you back or not.

9 REP. YOHO: Can you hear me now?

10 MR. DOUD: Just a little bit better.

11 Not much, sir.

12 MR. McKINNEY: Gregg, this is Ted

13 McKinney. He's coming through clearly with me,

14 so if that helps you.

15 REP. YOHO: Well, this is something we

16 need to address, too. I think it's rural

17 broadband. That's for a different conversation,

18 though.

19 MR. DOUD: That's a little better --

20 REP. YOHO: Can you hear me now?

21 MR. DOUD: -- Congressman, right

22 there. Yeah, let's try it again. Go from there.

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1 Yeah, I think we've got you back.

2 REP. YOHO: All right. So you heard

3 the part about the Mexican specialty production

4 subsidized by their government amounting to an

5 average of 200 million per year. As a result,

6 Florida's produce industry market share declined

7 from 2000 to 2019, while Mexico's grew by 217

8 percent. 217 percent. From 2009 to 2018,

9 Florida's economic contributions from the fruit

10 and vegetable farming sector was cut in half from

11 6.3 billion to 3.2 billion.

12 Mexico's unfair pricing schemes, cheap

13 labor, have helped them become the largest

14 exporters of fruits and vegetables to the U.S.

15 market during Florida's winter growing season.

16 The Mexican's government elaborate subsidy

17 enormously offsets production costs, provides

18 programs that elevate and encourage more

19 production.

20 Data shows that in 2013 alone,

21 Mexico's equipment infrastructure program

22 provided about $400 million in government

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1 subsidies for protected horticulture resulting in

2 skyrocketing production of tomatoes, bell

3 peppers, and strawberries, which are primary

4 targets to this program.

5 Mexico continues to capitalize and

6 expand its subsidy benefits for its produce

7 industry. Today, about 80 percent of Mexico's

8 produce grown under a protected structure is

9 destined for the U.S. market. Under the current

10 structure of the government's program for the

11 promotion of agriculture, all of Mexico's

12 protected agricultural structures are eligible to

13 receive subsidies up to four million pesos per

14 project, whereas in previous years, equipment

15 infrastructure have variable caps, the highest of

16 which was 2.7 million pesos.

17 The University of Florida Agricultural

18 and Applied Economics Association's Government

19 Support in Mexican Agriculture report was in

20 2018. So we've known about this for over two

21 years. Florida's specialty crop farmers have

22 been left without a mechanism to combat these

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1 unfair trading practices for seasonal and

2 perishable produce for more than two decades.

3 With no current trade remedy,

4 multigenerational family farms will shut down.

5 And once they're gone, they're gone for good.

6 And just a case in point on that. I talked to

7 blueberry farmer, and I think she's on this call

8 or has been, Brittany Lee. They cut back 25

9 percent last year because of the prices because

10 they couldn't compete with Mexico. This year,

11 they had to cut back 25 percent more. So they've

12 cut back 50 percent in two years.

13 I had a cattle farmer that used to

14 grow produce. He grew all the specialty crops.

15 He's out of business on that because labor and

16 the price. He says, I can't get the price for

17 them, and this is happening all over America, or

18 in the southeast anyway.

19 I represent many blueberry and

20 watermelon growers specifically who have

21 experienced firsthand the devastating fact of

22 these unfair trade practices, and this blows me

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1 away. From 2012 to 2018, the value of U.S.

2 imports of Mexican blueberries -- I want you to

3 hear this number if you haven't heard it. The

4 value of U.S. imports of Mexican blueberries in

5 this six-year period of time, 2012 to 2018, grew

6 by 708 percent with a sustained average annual

7 growth rate of 47 percent.

8 As the pandemic hit us hard, Florida

9 farmers had to plow under their harvest-ready

10 crops because of a market collapse and factors

11 outside of their control. Yet at the very same

12 time, and Ted, you and I have talked about this,

13 Mexico continued to ship crops into the U.S. by

14 hundreds of truckloads, while my farmers are

15 plowing this stuff up. Mexico shipped an

16 additional 1.5 million flats of blueberries to

17 the U.S. from January to April, versus the same

18 period in 2018, a market share increase of 64

19 percent.

20 Mexico's incremental additional

21 volumes in 2020 surpassed Florida's total

22 blueberry shipments in that period of time.

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1 Mexican produce shippers from numerous years,

2 including 2020, have aggressively targeted the

3 Florida produce industry predominate eastern

4 market terminals with far lower prices than in

5 western market terminals, and we know this for a

6 fact. This has forced Florida growers to compete

7 against an unviable minimum price structure in

8 their own backyard, lending to financial

9 downfall.

10 This is not sound economic or ag

11 policies. Mexico's unjust practices have harmed

12 Florida producers, their revenues, their market

13 shares, jobs, numbers, and ultimately our state's

14 ability to remain competitive. Nearly all of

15 Florida seasonal producers have been left

16 defenseless against their unfair competitive

17 practices and the USMCA and NAFTA combined.

18 The Florida produce industry has

19 little hope for the future unless the

20 administration institutes trade relief this year

21 that can stop and reverse the hemorrhaging in our

22 industry resulting from these unfair practices.

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1 I'm not going to finish that part. I just want

2 to add this one part.

3 We've all heard how the American

4 farmer feeds the world. If the seasonality issue

5 of Mexican produce competing with our farmers is

6 not corrected immediately, it'll be a phrase that

7 is meaningless. There soon will not be enough

8 people engaged in farming in the U.S. for us to

9 be food secure.

10 This is not rhetoric, and it's not

11 hyperbole. It's a fact. A nation that does not

12 have food security does not have national

13 security. If USMCA is not corrected for

14 seasonality of the southeast producers with

15 Mexico, then you will see food production go the

16 same way as the textile industry, the furniture

17 industry, et cetera. If you truly are

18 negotiating for the very best of America, then

19 why would we not do something for our farmers,

20 especially the ones in the southeast. And I

21 yield back. Thank you.

22 CHAIR KIMMITT: Thank you Congressman.

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1 This concludes Session 1, and we are now going to

2 take our scheduled morning break. And we'll

3 reconvene at 11:00 a.m.

4 (Whereupon, the above-entitled matter

5 went off the record at 10:34 a.m. and resumed at

6 11:12 a.m.)

7 MR. BISHOP: Welcome back. We

8 apologize for the technical difficulty. My name

9 is Cameron Bishop. I'm a Deputy Assistant United

10 States Trade Representative. We are going to

11 continue with the Session 2 program. As we get

12 going, I'm going to kick it back over to William

13 Kimmitt to run the program, and we'll pick up

14 just where we were.

15 CHAIR KIMMITT: Thank you, Cameron.

16 And thank you to everyone for your patience as we

17 work through these issues. As we begin this next

18 session, obviously we're getting a little later

19 start than we had hoped, which will condense this

20 session a little bit. And we're going to do our

21 best to stay on schedule.

22 So we do ask if those testifying could

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1 do their best to limit their remarks to the five

2 minutes. And if I do cut you off, I apologize in

3 advance, but it's just to keep us on schedule.

4 And so now we will begin our second session

5 beginning with Mr. John Hoblick from the Florida

6 Farm Bureau Federation.

7 MR. HOBLICK: Thank you, and good

8 morning, Representative Bishop, Under Secretary

9 McKinney, and Assistant Secretary Kessler. I'm

10 John Hoblick, President of the Florida Farm

11 Bureau Federation, representing nearly 140,000

12 member families. Today I'm honored to bring you

13 testimony of gratitude for the hearing today and

14 for pledges made by officials to develop and

15 implement a plan to address the trade inequities

16 that have plagued the Florida grower for decades.

17 I also bring remarks of urgency and

18 strong encouragement for immediate action to

19 enact a solution for our producers of seasonal

20 and perishable products. Like Ambassador

21 Lighthizer and the administration, Florida

22 agriculture saw it imperative to renegotiate the

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1 North American Free Trade Agreement. In fact,

2 Florida Farm Bureau was the only state farm

3 bureau to oppose NAFTA in the 1990s because of

4 unfair trade environment it would create and

5 obvious damage it would cause our producer

6 growers.

7 That damage has been documented over

8 the past couple of years thanks to the work of

9 our industry leaders, experts at our state

10 Department of Agriculture, and the economists at

11 the University of Florida. The data compiled by

12 these institutions is compelling and staggering,

13 which I believe you now have in your possession.

14 For instance, in the past 20 years, the estimated

15 domestic market share for Florida alone has

16 declined by 40 percent among specialty crop

17 categories, whereas Mexico's market share has

18 skyrocketed 217 percent. You heard this figure

19 before. We're down 40 percent, Mexico is up 217

20 percent.

21 Furthermore, based on the value of

22 these commodity categories such as strawberries,

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1 blueberries, sweet corn, watermelon, tomatoes,

2 and peppers, Mexican import values have increased

3 413 percent over that same time period, while

4 Florida's production remained relatively static.

5 And perhaps more shocking is this data is only

6 reflective of the impacts to one state's

7 agriculture sector.

8 Let me be clear. No longer is this a

9 dilemma confined to one state or one commodity.

10 In addition to story after story from Florida

11 specialty crop producers, you'll likely receive

12 insightful comments from asparagus farmers in

13 Michigan, blueberry growers in Georgia, or onion

14 producers in New York, all experiencing the

15 familiar unfair trade practices that will persist

16 without a remedy. Rest assured, these effects of

17 high volumes and low prices are spreading with

18 fierceness, not unlike the current pandemic that

19 we're also working under today.

20 As it has, and for the past 25 years,

21 Florida agriculture will continue to experience

22 decline in markets unless the federal officials

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1 choose to respond with a seriousness and resolve

2 unlike they have ever done before. That

3 seriousness shows in the good faith commitments

4 you've made and have lived up to doing this

5 hearing today. But much more work needs to be

6 done.

7 When you do your due diligence and

8 it's complete and the comments are considered and

9 the data is analyzed, I hope you will arrive at

10 the same conclusions that we have. A Section 301

11 investigation initiated by the USTR is clearly,

12 clearly warranted. Such an investigation will

13 back up detailed analysis from the University of

14 Florida and our Department of Agriculture and

15 will hopefully deliver timely, durable, and

16 effective results and address the discriminatory

17 trade practices at play.

18 It's abundantly clear that we rest at

19 a critical juncture here today. As they have in

20 the past, farm families, some who have openly

21 considered how much longer they can stay in

22 business and sustain their livelihoods, will

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1 likely approach the leaders present today and

2 ask, what did you do for fair trade when you had

3 the chance? And I hope we can tell them, as

4 industry leaders and you as federal policy

5 makers, we did absolutely everything within our

6 influence and your authority to advocate on

7 principles of fair trade for the hard working

8 farm families of Florida. Again, on behalf of

9 Florida producers, present and past, I thank you

10 for your time and efforts thus far for our

11 domestic growers and urge your continued

12 partnership towards the best long-term solutions

13 for our industry. Thank you.

14 CHAIR KIMMITT: Thank you, Mr.

15 Hoblick. And again, we are going to try to get

16 back on schedule, but I think we have time for

17 one question, if you can hear us, from Mr.

18 Cameron Bishop.

19 MR. HOBLICK: Sure.

20 MR. BISHOP: Mr. Hoblick thanks for

21 your testimony and thanks for representing your

22 members at this session today. I'm curious if

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1 you can talk a little bit about market conditions

2 for your specialty crop producers. I'm curious

3 about the price of production and what price

4 there is from the market and if you can elaborate

5 on if any of your producers are taking a loss on

6 their products.

7 MR. HOBLICK: Well, I think there's

8 been a lot of testimony thus far as to the lower

9 prices that we are experiencing in the

10 competitive market as far as all those

11 commodities. And I believe it was mentioned that

12 taking the base of $5.50 cost per one of these

13 commodities, that the transportation costs aren't

14 even close to that being delivered. Yet that's

15 what the market price is.

16 Our growers and producers have

17 constantly been faced with lower prices from

18 Mexico that have them or forced them to sell

19 their product at or below cost of production.

20 And that has happened historically ever since the

21 inception of NAFTA, quite honestly. So we've

22 taken a stand that we really need to study these

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1 price structures, making sure that they're fair

2 across the board, and that we're not allowing a

3 tremendous amount of volume at lower prices than

4 our cost of production. Quite simply, our cost

5 of production needs to be met to stay in

6 business.

7 CHAIR KIMMITT: Thank you, Mr.

8 Hoblick. We will now welcome Zhengfui Guan from

9 the University of Florida for his testimony here

10 today.

11 DR. GUAN: Good morning. My name is

12 Zhengfei Guan, Associate Professor for University

13 of Florida. Thank you for the opportunity to

14 testify.

15 (Audio interference.)

16 CHAIR KIMMITT: Should I say

17 something? Good morning, Dr. Guan. I think we

18 can see you and probably can hear you, if you

19 want to begin your testimony.

20 DR. GUAN: Good morning. My name is

21 Zhengfei Guan, Associate Professor of Food and

22 Resource Economics at the University of Florida.

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1 Thank you for the opportunity to testify before

2 this committee. I will quickly summarize my

3 findings on Mexican subsidies.

4 Florida is one of the top suppliers of

5 fresh fruit and vegetables for the United States

6 with market shares falling, while imports from

7 Mexico have grown dramatically. For example,

8 blueberry imports from Mexico increased 30-fold

9 by 2018 compared to the (inaudible). This

10 conventional system that Mexico's competitive

11 advantage through labor is the driving force of

12 the gap.

13 I was curious whether there was

14 another force behind the change. It turns out

15 that Mexico has been systematically subsidizing

16 the fruit and vegetable industry throughout the

17 supply chain, from production to harvest

18 management, and marketing.

19 MR. KESSLER: I'm sorry. I'm having

20 a little bit of trouble hearing you. Could you

21 maybe go closer to the microphone? I don't know

22 if anybody else is having trouble hearing you.

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1 MR. McKINNEY: Thank you, Jeff. Yes,

2 this is Ted. I, too, am having difficulty.

3 DR. GUAN: I'm sorry. Mexican

4 agriculture subsidies are administered by its

5 Ministry of Agriculture and the National

6 Development Plan, which consists of a number of

7 subsidy programs. Mexico's agriculture subsidy

8 from 2006 to 2016 averaged 59 billing peso, $or

9 4.5 billion per year.

10 The largest subsidy program was the

11 agriculture immersion program which accounted for

12 about 30 percent of the total subsidy program in

13 2018. All of the subsequent programs are

14 relevant for fruit and vegetable production.

15 Irrigation technology is the largest of that

16 program. They subsidize it up to 50 percent of

17 the project cost. In 2014, they had a budget of

18 $115 million. The other three sub-programs had a

19 budget of 65 million dollars for fruits and

20 vegetables.

21 One of the sub-programs is protected

22 agriculture. It subsidizes protective

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1 structures, including shadehouses and

2 greenhouses, which are critical for export-

3 oriented production. In 2013, for example, the

4 maximum amount of subsidy for greenhouses was 3

5 million pesos per project, and the amount for

6 shadehouses was 2.4 million per project. In

7 2019, the amount increased to 4 million pesos or

8 over $200,000 U.S. for all eligible protective

9 structures.

10 Protected production mainly targets

11 export market. Total subsidies for protected

12 agriculture alone were over 6 billion pesos

13 between 2001 and 2016, which is over $500

14 million. This support from the government, the

15 acreage of protected agriculture in Mexico

16 increased 64-fold between 2000 and 2018.

17 Tomatoes have about 40,000 acres in

18 the protected structures alone. For comparison,

19 Florida's total tomato acreage was about 29,000

20 acres, almost all open field. As a result of

21 this investment, Mexican protected tomato yield

22 is four times higher than Florida had.

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1 Fair to say that the protective

2 production has transformed the Mexican fruit and

3 vegetable industry, particularly exports that are

4 in production. Overall, 94 percent of the

5 protected structures in 2018 was used to produce

6 fruits and vegetables and 56 percent was used for

7 four crops. They are tomatoes, strawberries,

8 bell peppers, and blueberries, some of Florida's

9 top ranking specialty crops.

10 Today's testimony has highlighted

11 major field production issues. There are other

12 types of subsidies that have created different

13 opportunities throughout this: post-harvest

14 management and marketing. In conclusion, Mexico

15 has an expansive subsidy program. Subsidies have

16 produced constant production, restored their

17 market, and have negatively affected the Florida

18 fruit and vegetable industry. Thank you. I'll

19 be more than happy to take questions.

20 CHAIR KIMMITT: Thank you, Dr. Guan.

21 Why don't -- USTR took the last turn. Why don't

22 I see if our colleagues at USDA or Commerce have

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1 any questions.

2 MR. McKINNEY: Thank you, sir. This

3 is Ted McKinney. Am I coming through at least

4 audio? Good. Again, I presume that your report

5 will be submitted, or is it already online to us?

6 I'm very interested in diving deeper with my

7 team.

8 DR. GUAN: I submitted the documents,

9 and I think it should be available online.

10 MR. McKINNEY: Thank you so much.

11 CHAIR KIMMITT: Thank you. And again,

12 I have to accelerate slightly to get back on

13 schedule. Thank you for your testimony, Dr.

14 Guan. I would now like to welcome Mr. Mike

15 Joyner from the Florida Fruit & Vegetable

16 Association.

17 MR. JOYNER: Good morning. It's nice

18 to see all of you gentlemen this morning. I'm

19 Mike Joyner, and I serve as the President of

20 Florida Fruit & Vegetable Association. We

21 represent growers of fruits, vegetables, and

22 agricultural crops in Florida. FFVA is grateful

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1 for the Administration's commitment to take

2 timely trade action to remedy the unreasonable

3 Mexican trade practices and policies that are

4 causing harm to Florida's seasonal and perishable

5 produce industry.

6 Florida -- as you've heard so often

7 this morning, Florida ranks first or second in

8 the nation in the value of production of many

9 seasonal and perishable crops, including squash,

10 blueberries, strawberries, bell peppers, and a

11 host of others. Our industry is essential in

12 feeding Americans fresh U.S.-grown produce from

13 November to late spring. However, our ability to

14 do so has severely eroded over the last few

15 decades because of unfair trade practices by

16 Mexico, which shares our growing seasons.

17 Mexican produce shipments grew by high

18 triple digit percentages from 2000 to 2019,

19 including sizable growth from 2017 to 2019.

20 Conversely, our industry suffered proportionate

21 declines during those same periods. You heard

22 earlier from Dan Sleep, who's with the Department

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1 of Ag and Consumer Services here in Florida, and

2 he discussed the data that shows these harmful

3 growth trends.

4 You'll later here how this explosive

5 growth and imported Mexican fruits and vegetables

6 is devastating Florida growers and their

7 families. Just last spring, our Florida

8 producers were plowing under crops they couldn't

9 sell because of the shutdown of the food service

10 industry here in Florida. Mexico shipped an

11 additional 1.5 million flats of blueberries into

12 the U.S. from January to April, versus the same

13 period in 2019. Mexico also shipped an

14 additional 2.2 million cartons of bell peppers in

15 that same three-month period, again, while we

16 were plowing under crops.

17 So how did we get here? We got here

18 because of Mexico's unfair industry subsidies and

19 unfair pricing of fruits and vegetable imports.

20 Mexico's growth in the U.S. produce market over

21 the past two decades has been made possible

22 largely because of its unreasonable prices and

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1 policies.

2 Every year, the Mexican government has

3 strategically funneled extraordinary levels of

4 support into expanding the volume, diversity, and

5 export competitiveness of their protected

6 agriculture. Within these unfair subsidies,

7 Mexico's produce industry would have not enjoyed

8 the same skyrocketing growth trends that studies

9 have documented.

10 We remain deeply concerned, too, about

11 Mexican industry's sustained pricing -- or,

12 practice of targeting our eastern markets with

13 prices that are cheaper than their prices in the

14 western markets. Despite our calls to send their

15 products east, this unfair practice has occurred

16 for years and in many crops. The Mexican

17 industry's aim is to set an unfairly low market

18 entry price that forces our growers to meet that

19 price, or abandon the sale.

20 Today has confirmed that these

21 policies and practices have burdened and

22 restricted U.S. commerce, grossly distorting the

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1 eastern produce market year after year. They

2 systematically eroded our industry's revenues,

3 market share, job numbers, and ultimately our

4 ability to compete.

5 Florida's fresh produce industry is in

6 crisis. It needs prompt USTR trade relief. Our

7 country hopes to continue to feed Americans

8 domestically grown fruits and vegetables in the

9 fall, winter, and spring. To save Florida's

10 produce industry, we respectfully urge USTR to

11 launch an investigation of Mexican trade

12 practices and policies under Section 301, the

13 Trade Act of 1974, without delay, or launch a

14 trade relief measure that is equally timely,

15 effective, and as lasting as 301.

16 Let me conclude by reiterating my

17 appreciation and my members' appreciation for

18 your time today and by passing along a quote from

19 one of my growers. When I asked him to summarize

20 the situation, he very simply said, Mike, we're

21 being buried by volume and crushed by price.

22 Thank you all very much.

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1 CHAIR KIMMITT: Thank you, Mr. Joyner.

2 I think we do have time for a few questions. I

3 will turn it over to Ambassador Doud.

4 MR. DOUD: Mike, good to see you.

5 MR. JOYNER: You too, Ambassador.

6 Thank you so much.

7 MR. DOUD: You mentioned targeting

8 producers in the U.S. My quick question is, what

9 products do you see being targeted in your part

10 of the world? What commodities?

11 MR. JOYNER: Ambassador, thanks for

12 the question. Ambassador, when NAFTA passed, we

13 initially saw tomatoes and bell peppers. That

14 seemed to be the area that was most targeted.

15 Now we're seeing strawberries, blueberries,

16 watermelons, and sweet corn. We're starting to

17 see more and more sweet corn, where prices are

18 just extremely low.

19 One of the things, though, Ambassador,

20 that the University of Florida -- I know you all

21 -- well, I talk that back. It was Dan Sleep's

22 work. What you'll see in Dan's work is that the

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1 Florida Department of Ag studied 24 different

2 Florida fruits and vegetables and found that 83

3 percent of them suffered market loss share due to

4 unfair Mexican imports. So Ambassador, again, 24

5 studied, 83 of them were suffering from lower

6 prices. But the four or five I mentioned are the

7 ones that seem to be the target.

8 MR. DOUD: Thank you.

9 CHAIR KIMMITT: I think we have time

10 for one more quick question if Assistant

11 Secretary Kessler might have one.

12 MR. KESSLER: Thank you. Yes, thank

13 you very much for your testimony. I think my

14 question is, do you attribute -- or, how much of

15 the harm do you attribute to Mexican subsidies

16 versus nonsubsidy-related factors, pricing

17 schemes? Do you have a sense of how much -- how

18 important each of those is in causing the harm

19 that you're describing?

20 MR. JOYNER: Mr. Assistant Secretary,

21 thanks for the question. We look at things like

22 labor cost. We believe Mexico pays their labor

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1 about ten percent of what we pay ours. There's

2 the issue of the devaluation of the peso that a

3 lot of my members talk about fairly frequently.

4 There's inspection issues.

5 But the elephant in the room is this

6 issue of subsidies and these lower prices.

7 Again, they're, we're seeing -- so as far as a

8 percentages goes, I don't know. But we really do

9 feel like the rest of that stuff does not matter

10 as much if we can't get this subsidy issue and

11 this unfair pricing fixed.

12 Yeah, I mean, again, we see so often

13 -- well, I'll stop with that. We see so often

14 breakeven points for bell peppers at $16 and yet

15 it's coming from Mexico at 12 and 13. And again,

16 breakeven is at 16.

17 MR. KESSLER: Can I just ask one more

18 question? Is the problem equally urgent for all

19 the crops that you described right now, or is

20 there one or more that where the problem is

21 particularly urgent?

22 MR. JOYNER: I would say the urgency

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1 is blueberries, tomatoes, strawberries,

2 watermelons. You know what? I should have put

3 bell peppers in the third slot and then finally

4 sweet corn. But again, it is those five

5 commodities that seem to be -- that will have a

6 short life span if we can't get this right. So

7 again, blueberries, strawberries, bell peppers,

8 tomatoes, sweet corn, and watermelons.

9 MR. KESSLER: Thank you.

10 CHAIR KIMMITT: Thank you, Mike.

11 Thank you, Mr. Joyner. We'll now welcome Mr.

12 Sergio Contreras. Apologies. One second.

13 I apologize. I'm told from our

14 technical folks here that we're going to take a

15 short break and hopefully be back on line in just

16 a minute or two. But we need to take a short

17 break to correct a technical issue.

18 (Whereupon, the above-entitled matter

19 went off the record at 11:36 a.m. and resumed at

20 11:45 a.m.)

21 MR. CONTRERAS: -- pursuing trade

22 distorting policies to benefit one region risk

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1 pitting different regions of the country against

2 each other. If successful, this tactic will

3 result in higher prices for U.S. consumers while

4 reducing availability, selection, and quality in

5 the supermarket aisles for items such as

6 tomatoes, avocados, bell peppers, watermelons,

7 strawberries, and blueberries, just to name a

8 few. Trade is essentially in the effort to lower

9 food cost for American families and increasing

10 availability and variety for consumers.

11 The seasonality provision within trade

12 law will result in a tit-for-tat trade disputes

13 within U.S. trade partners that would drive up

14 consumer cost while limiting the supply of fresh

15 produce items consumers purchase year round.

16 Consumers from the U.S. currently enjoy the

17 lowest food costs in the world with just 6.4

18 percent of U.S. income going towards food. U.S.

19 per capita consumption of fresh vegetables stood

20 at 126.8 pounds per year in 1993 before NAFTA.

21 However, in 2016, U.S. per capital

22 consumption of fresh vegetables had reached 145.1

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1 pound per year, a 14 percent increase. However,

2 some fresh fruits and vegetables simply are not

3 available in sufficient volumes from the U.S. In

4 certain months, underscoring the value of U.S.

5 companies sat down and working with farms in

6 Mexico and Canada to produce and export the foods

7 that contribute to healthful eating habits for

8 U.S. consumers.

9 The BTA strongly opposes any

10 agricultural seasonality provisions or import

11 quotas as it would run counter to the consumer

12 preferences undermining the spirit of the tri-

13 national free trade agreement of the USMCA.

14 Thank you for your leadership. The Border Trade

15 Alliance appreciates the opportunity to provide

16 this testimony for the record. Thank you.

17 CHAIR KIMMITT: Hi, we are having some

18 issues. I think if you can hear me --

19 (Simultaneous speaking.)

20 MR. McKINNEY: It's very informative

21 and appreciate what you've done. I'm sure you

22 view the --

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1 (Simultaneous speaking.)

2 MR. McKINNEY: -- and problems that

3 have been laid out by some. I'm curious how you

4 view --

5 (Simultaneous speaking.)

6 MR. McKINNEY: -- and other problems

7 that have been laid out by speakers prior to you.

8 Do they not affect some of the other constituents

9 you have perhaps in other parts of the U.S. Just

10 comment on that generally, if you would.

11 MR. CONTRERAS: Thank you, sir, for

12 the question. And yes, I did hear and listen to

13 comments provided earlier today. And speaking

14 just on some comments that have been provided to

15 your office as well as the hearing portal is that

16 for agriculture subsidies in general based on

17 support to producers as a percentage of gross

18 support, we see Mexico had a lower percentage of

19 support, around 9 percent, and the U.S., 10.7

20 percent from 2017 to 2019.

21 Of course, the question at issue is

22 the subsidies for produce and whether those

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1 subsidies are trade distorting. Also, based on a

2 University of Arizona study, Mexico has a small

3 amount of non-commodity-specific capital

4 investment assistance programs that assist fruits

5 and vegetables which are comparable to the

6 environmental quality incentive program in the

7 United States.

8 CHAIR KIMMITT: Thank you, sir. We'll

9 now welcome Mr. Scott Vandervoet from Vandervoet

10 and Associates.

11 MR. VANDERVOET: Good morning. Thank

12 you for allowing me to participate. Can you see

13 and hear me okay?

14 CHAIR KIMMITT: We can.

15 MR. VANDERVOET: Thank you. Thank

16 you, again. As the owner and operator of a

17 business that imports and markets fresh produce

18 from Mexico into the United States, I consider my

19 perspective to be pertinent to the issue

20 addressed in these hearings. Our business was

21 incorporated in Arizona by my father in 1994 with

22 a focus on meeting market expectations for high

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1 quality produce.

2 We work with growers in nearby Sonora,

3 Mexico. I've been directly involved in the

4 business for a decade. And in that short time,

5 I've witnessed a wide variety of impacts to the

6 fresh produce marketplace within the United

7 States.

8 Consumers have become accustomed to

9 quality and consistency along with variety within

10 both the produce section of the local supermarket

11 as well as the menus of restaurants ranging from

12 fast food to fine dining. As a marketer, I

13 witness the volatility of markets both day-to-day

14 but also season-to-season. Supply and demand

15 ultimately dictate the marketplace.

16 But alongside these age old parameters

17 are 21st century realities. Consumers'

18 expectations are met due to the suppliers being

19 able to source product for multiple growing

20 regions. In the case that one area falls short

21 of production forecasts, another region of

22 production is able to fill the void.

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1 During our seasons of importing and

2 marketing fresh produce, I interact multiple

3 times a day with the growers who export their

4 products to our company. I witness firsthand the

5 issues they deal with on a day-to-day basis,

6 whether it'd be in respect to weather conditions,

7 pest management, labor or transportation, among

8 other things. Farmers in Mexico are not alone in

9 facing these issues as they are commonplace in

10 agriculture around the globe.

11 What I can directly vouch for is the

12 ethic and commitment of the farmers we work with

13 to bring a crop to market. My grower partners

14 are some of the most dedicated, hardworking

15 individuals I've ever met. And not only are they

16 laser-focused on the conditions at their

17 production areas, but also the trends and

18 tendencies of the U.S. consumer, both in the

19 retail and food service sectors.

20 We adjust seed varieties, growing

21 techniques, pack styles, pack material, and

22 grading to adapt to the trends within the

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1 wholesale marketplace. Consistency of production

2 in terms of quality and condition is the ultimate

3 goal every day. As some of the growers we work

4 with have packed under the same label for

5 decades, years have been dedicated to ensuring

6 that clientele throughout the supply chain

7 recognize the brands and labels as well as the

8 quality and consistency that they represent.

9 I'm a firm believer that healthy

10 competition benefits all those involved. It

11 makes everyone better and it creates a superior

12 product for the marketplace which the consumer is

13 more likely to purchase again. I'm proud to be

14 the second generation in our business.

15 Our company is competitive because of

16 our ethic and dedication. When we struggle to

17 find a place in the wholesale or retail market

18 for our items, we step back and analyze why we

19 are not being competitive. We have gone through

20 our fair share of difficult seasons. And each

21 time we struggle in our marketing, we adjust our

22 practices so as to better serve our client base.

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1 It appears to me that the basic

2 premise of these hearings is to work towards

3 restricting imports simply because they have been

4 more successful at meeting consumer demand.

5 Applying trade remedies for seasonal produce has

6 the potential to penalize companies such as mine

7 for the simple reason that I'm meeting the

8 expectations of the market. I do not think it is

9 the role of the government to pick winners or

10 losers. The marketplace should be allowed to

11 function in a way where consumers decide which

12 items are most favorable. That concludes my

13 testimony. Once again, thank you for the time.

14 CHAIR KIMMITT: Thank you, Mr.

15 Vandervoet, and appreciate your testimony. I

16 think we have time for one question, and I will

17 turn it over to Ambassador Doud.

18 MR. DOUD: Thank you, sir, and

19 appreciate you being here today for this hearing.

20 Several witnesses today have highlighted that

21 imports of Mexican produce are sold at a lower

22 price in eastern markets in the United States

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1 than they are on the West Coast. Could you

2 describe the markets in which your company sells

3 produce and how market conditions and pricing

4 differ between these different markets and

5 regions in the U.S.?

6 MR. VANDERVOET: As an importer and

7 marketer based in Nogales, Arizona, we focus --

8 our company focuses our attention on the West

9 Coast for the most part. We participate in the

10 spring watermelon season. And I can tell you

11 that this past spring going into the Memorial Day

12 holiday where there's quite a bit of demand on

13 watermelons, we saw higher pricing out of Florida

14 at that time with very good movement.

15 In fact, at this moment, the

16 California crop is being sold at or just slightly

17 below what we marketed our crop for mostly in the

18 month of May. I see there being differences at

19 times. But in general, we aim not to overlap

20 with our crops. We focus on markets that are

21 closer to us because with a perishable commodity,

22 freshness is crucial.

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1 CHAIR KIMMITT: Thank you. Looking at

2 the clock, I think we actually have time for one

3 more question for you, Mr. Vandervoet, if

4 Assistant Secretary Kessler might have one.

5 MR. KESSLER: Sure. Well, thank you,

6 Mr. Vandervoet, for your testimony. You said and

7 I think we agree that healthy competition is

8 good. I guess the question that we're trying to

9 sort out is whether the competition is healthy or

10 not.

11 And to that point, I'm curious if

12 you're familiar -- you import Mexican produce --

13 if you're familiar with any of the subsidy

14 schemes that were described earlier this morning.

15 What's your impression of those? Do they make a

16 real difference in the pricing practices of

17 Mexican exporters?

18 MR. VANDERVOET: As an importer and

19 marketer, I don't get directly involved in the

20 growing or farmer. So I'm not directly aware of

21 the costs of farming, either in Mexico nor the

22 costs of farming in Florida, Georgia, or other

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1 parts of the United States. I can't speak to

2 what level governments provide support, whether

3 it be the Mexican government or in the United

4 States.

5 The number of 200 million has been

6 thrown out a few times, and I'm interested in

7 seeing some of the details of the breakdown

8 there. I can just tell you that from a marketing

9 perspective, most of the time we compete in a

10 very healthy way. And our pricing is in line and

11 at times higher here in Nogales as a shipping

12 point than other parts of the United States when

13 we overlap.

14 CHAIR KIMMITT: Thank you, Mr.

15 Vandervoet. We'll now welcome Mr. Skip Hulett

16 from NatureSweet to provide his testimony.

17 MR. HULETT: Yes, can you hear me?

18 CHAIR KIMMITT: We can.

19 MR. HULETT: Okay, great. Well, good

20 morning. I guess soon to be afternoon for you

21 all. Again, my name is Skip Hulett. I'm general

22 counsel with NatureSweet, headquartered here in

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1 San Antonio, Texas. I certainly want to thank

2 you for allowing me to be here today, and I

3 certainly look forward to discussing the negative

4 impacts that additional trade action with respect

5 to seasonal and perishable products would have on

6 our company, on innovation and the industry, and

7 certainly on the U.S. consumer.

8 NatureSweet is an industry leader. We

9 produce a one-of-a-kind specialty tomato in

10 Mexico and in the United States. And we're

11 responsible for over 36 percent of the specialty

12 sales in the U.S. And we're the single source

13 solution for organic and nonorganic greenhouse

14 grown tomatoes in North America. And our

15 production techniques, our innovation to develop

16 new varieties are really driven through

17 consumers' preference and demand for snacking

18 tomatoes.

19 NatureSweet has made significant

20 investments in production and development in its

21 specialty tomatoes to respond to the consumer

22 demand all year round. And these investments in

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1 research and development range from designing a

2 package which allows the freshest tomatoes to

3 stay fresh longer and safer in transport, to

4 greenhouse design, to management models insuring

5 our employees we call associates have the

6 resources to do their best and to produce the

7 best.

8 We've expanded this model into the

9 United States, making significant investments.

10 And in Arizona, we've invested over 100 million

11 dollars in 250 greenhouse -- acres of greenhouses

12 in Wilcox, Arizona. And especially greenhouse

13 tomatoes are not the problem, and our tomatoes

14 are not part of any import-related problem.

15 As a result of our considerable

16 investment, our research and development into

17 consumer preferences over the many years, I would

18 say that NatureSweet is largely responsible for

19 the development of a new market for specialty

20 snacking tomatoes. What we grow and what we

21 import are not traditional tomatoes for the food

22 service industry or for bulk purposes. Our

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1 products are different.

2 They're different from all other

3 tomatoes. And it's evident when you go into the

4 supermarkets, into the produce section, our

5 specialty tomatoes are priced well above the

6 competition. They visually look different. They

7 cater to a specialty niche market. And trade

8 measures will have an unintended negative impact

9 on innovation.

10 And recognizing the need for

11 innovation, NatureSweet has achieved its status

12 as a market leader without protection of trade

13 measures. We've grown by producing superior

14 innovative premium products which consumers love.

15 And some of our specialty products didn't exist

16 10 years ago, 20 years ago.

17 And as a company operating in Mexico

18 and in the U.S., we are subject to the suspension

19 agreement to the Department of Commerce on

20 tomatoes from Mexico. So I think we're in a

21 unique position to comment on the negative impact

22 that additional trade measures will have on the

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1 industry. And trade measure restrict market

2 access. You've heard that. You know that. And

3 it certainly should be applied very cautiously

4 and only when there's a true immediate need.

5 Companies like NatureSweet are true

6 innovators in production techniques and branding,

7 vertical integration direct from the greenhouse

8 to the consumer and product development,

9 marketing. And again, we produce premium high

10 priced specialty tomatoes year round. We don't

11 compete with conventional tomato producers.

12 Our tomatoes are the highest priced in

13 the market. And what we grow in the U.S., what

14 we grow in Mexico are priced the same. And

15 generally, they are more than three times the

16 price of a regular tomato offering. And the

17 current antidumping suspension agreement has

18 already resulted in limiting innovation and

19 product development given there's a high minimum

20 price point required for tomatoes crossing the

21 border.

22 Introducing new varieties to

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1 consumers, it takes time. We can't easily do so

2 with current restrictions in place. Further

3 seasonal restrictions would devastate our year

4 round production model. It would further stifle

5 innovation into new production techniques and

6 certainly wouldn't benefit, I think, even the

7 U.S. producers of greenhouse tomatoes.

8 We don't compete with Florida at our

9 price point. We just don't. But I appreciate

10 you allowing me to share our story, and I'm

11 certainly open to answering any questions you

12 might have.

13 CHAIR KIMMITT: Thank you, Mr. Hulett.

14 I'll see if Under Secretary McKinney has any

15 questions for you.

16 MR. McKINNEY: Yes. Yes, I do. And

17 thanks and appreciate your attention to

18 innovation. We here at USDA, USTR as well are

19 really launching a new innovation strategy that I

20 think is going to be helpful for all of U.S.

21 agricultural food and ag products.

22 Going back to that, there's got to be

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1 innovation in the southeast just as there is

2 innovation in the southwest. What is the

3 difference? What is your magic bullet, your

4 silver bullet that is working for you that could

5 or should be working in other parts of the U.S.?

6 Could you elaborate on that just a little bit?

7 You touched on it. Take that just about one

8 level deeper, please.

9 MR. HULETT: Yeah, I'll try.

10 Certainly, I think climate has a lot to do with

11 it. Even though you're in a protected

12 environment, the climate still has a huge impact.

13 And the areas in, outside of Guadalajara and the

14 foothills of the Sierra and in the valley. I

15 mean, it's just Mother Nature has provided a very

16 suitable climate for what we do.

17 We have a more high tech greenhouse

18 facility that we acquired in Arizona. And we're

19 spending a lot of money to make it suitable for

20 what we do. Different challenges, but I think

21 climate -- if I had to pick one thing, climate is

22 a big factor.

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1 MR. McKINNEY: Thank you very much.

2 CHAIR KIMMITT: Thank you. Assistant

3 Secretary Kessler, do you have any questions for

4 Mr. Hulett?

5 MR. KESSLER: Yes. First of all, good

6 to speak with you, Mr. Hulett.

7 MR. HULETT: Good to see you again.

8 MR. KESSLER: It's been a while, but

9 I hope you're doing well. My question is along

10 the lines of the question I posed to the previous

11 witness. So you're producing in Mexico. Have

12 you come into contact -- are you familiar with

13 these alleged subsidy schemes that were described

14 in previous testimony this morning, subsidies for

15 technology? And what's your company's stance on

16 those?

17 MR. HULETT: Yeah. I mean, I'm

18 listening to that. And of course, in the back of

19 my mind, I'm thinking maybe I'm not doing a good

20 job. But it's just inconsistent with what I've

21 seen in our operation. I can't speak for others.

22 But again, a lot of what I heard is kind of

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1 surprising to me.

2 I think certainly -- and one point

3 that I think the couple folks back mentioned that

4 there's at least some indication that Mexico has

5 a less percentage of support than the U.S. I

6 don't know one way or the other. But I can just

7 tell you from our experience, not consistent with

8 our operation.

9 CHAIR KIMMITT: Thank you, Mr. Hulett.

10 I appreciate your testimony today. We'll now

11 welcome Mr. Demetrio Kyriakis from the Nogales

12 U.S. Custom House Brokers Association.

13 MR. KYRIAKIS: Hello. Good morning.

14 Yes, can you see me and hear me?

15 CHAIR KIMMITT: We can.

16 MR. KYRIAKIS: Okay. Good morning.

17 Well, once again, thank you for having me here

18 today. My name is Demetrio Kyriakis, Chairman of

19 the Nogales U.S. Custom House Brokers Association

20 based in Nogales, Arizona. I am also president

21 of my own company, K&K International Logistics,

22 LLC based out of Nogales, Arizona, Pharr, Texas,

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1 and Otay Mesa, California.

2 On behalf of the Nogales U.S. Custom

3 House Brokers Association, we're presenting this

4 testimony to communicate our dismay of the claims

5 that Mexico produce imports are negatively

6 affecting producers in Georgia and Florida and

7 that the USTR is considering remedies that would

8 benefit said producers. Meeting the needs of our

9 nation's food supply is a complex and dynamic

10 system that must ensure not just the availability

11 of food but ensure that products are

12 competitively priced and that consumers are

13 purchasing a safe and high quality product.

14 Mexican producers have been an integral part in

15 these efforts and an essential component of our

16 nation's food supply for decades.

17 As U.S. Custom House Brokers, we are

18 intimately aware of the origin of products from

19 Mexico and know that in many cases, the term,

20 Mexican producer, is not one that is easily

21 defined. There are a number of U.S. companies

22 that have invested or entered into joint ventures

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1 with legacy Mexican producers. Thus, in fact,

2 U.S. private sector interests are also being

3 affected by these hearings and the unproven claim

4 that trade-distorting policies may be

5 contributing to unfair pricing in the U.S. market

6 and causing harm to U.S. seasonal and perishable

7 producers in the U.S. commerce.

8 Our members provide the interface and

9 advocate compliance between the U.S. importer and

10 U.S. Customs and Border Protection. In Nogales

11 alone, we help clear customs for more than

12 175,000 produce trucks per year, carrying more

13 than 6.5 billion pounds of fresh produce with an

14 estimated value of 3 billion dollars. It is

15 imperative that as USTR conducts this assessment

16 of the claim by Florida and Georgia producers

17 that Mexican imports are resulting in unfair

18 pricing that all impacts, positive or negative,

19 for the entire nation be considered.

20 As U.S. Custom House Brokers in

21 Nogales, a large percentage of our business is

22 based on processing fresh produce imports.

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1 Should the USTR impose some form of punishment or

2 countervailing measures against Mexican fresh

3 produce imports, it will negatively affect our

4 custom brokerage business.

5 Measures that result in artificially

6 increasing the price of Mexican product to favor

7 those who originate in Florida and Georgia will

8 not only impact the volume of Mexican imports,

9 but it could also force producers in Mexico to

10 simply stop production or turn to other global

11 markets. China is actively pushing for greater

12 trade opportunities with Mexico, yet it is clear

13 that Mexico and Mexican producers prefer to deal

14 with the United States. The USTR led

15 negotiations with both Canada and Mexico for the

16 United States-Mexico-Canada Agreement.

17 The USMCA is an agreement that

18 formalizes the partnership with Mexico and Canada

19 and sets for a framework for collaboration and

20 dialogue versus one based on accusations and

21 animosity. We urge that the USTR focus not just

22 on a small number of producers in two states but

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1 rather assess the impacts to the whole nation's

2 food supply and the impacts to U.S. consumers,

3 U.S. investors, and American companies

4 nationwide. The negative impacts and losses in

5 the forms of jobs, investment, and security in

6 our food supply from a perceived remedy for a

7 small number of producers is simply in not the

8 best interest of American companies like ours or

9 in the best interest of our nation as a whole.

10 Now on a more personal note. As a

11 small business owner, I am a proud supporter of

12 the America First agenda as I believe many other

13 small businesses, business owners across the

14 country are as well. We have custom brokers,

15 freight forwarders, transportation companies,

16 warehouses or distributors which all belong to

17 our same industry. I urge this committee to

18 acknowledge that we are also America First.

19 We are also American companies paying

20 American taxes providing American jobs to

21 thousands of American families. My personal

22 business has already suffered a 30 percent loss

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1 due to this COVID situation as I'm sure many

2 others did as well or more so. If any of these

3 negative measures are taken, please know that

4 many businesses like mine and many American jobs

5 are at stake. That being said, we stand ready to

6 address any questions you may have, look forward

7 to an outcome that favors our nation collectively

8 and not only a small group of companies. Thank

9 you.

10 CHAIR KIMMITT: Thank you, Mr.

11 Kyriakis. I will turn it over to Ambassador Doud

12 who I believe has a question.

13 MR. DOUD: Thank you.

14 MR. KYRIAKIS: Yes.

15 MR. DOUD: And thank you for being

16 with us here. You noted in your testimony that

17 Mexican producers would potentially have to stop

18 their production and sending products to Mexico

19 if prices increase. But earlier this morning,

20 we've heard testimony from folks in Florida that

21 say that their production -- they've had to plow

22 under their production and stop production due to

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1 increased imports from Mexico. How do you square

2 this or put this in context? What's your take on

3 all of this?

4 MR. KYRIAKIS: Well, sir, it's a

5 little bit difficult to explain. And again, I

6 just may reiterate that we're involved mostly in

7 the clearance of customs and the logistics

8 coordination. So we're not directly involved in

9 the marketing or the distribution or the pricing

10 of such.

11 But what we have seen and what we do

12 see is that produce is a market-driven commodity.

13 And based on the demand and again on the

14 availability and accessibility is what drives the

15 consumers to purchase. So going back to my

16 statement of what we're seeing or what we foresee

17 happening if they're sending out these negative

18 measures taken is that it just won't be feasible

19 for Mexican companies to ship into the USA and

20 might look for other markets which obviously

21 would devastate our industry.

22 CHAIR KIMMITT: Thank you. Under

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1 Secretary McKinney, do you have any questions?

2 MR. McKINNEY: Yes, I do. Well,

3 first, thanks for the business that you run. In

4 my many, many, many years in the private sector,

5 I've worked with a number of distributors,

6 brokers. They go by different names. So thanks

7 for what you do. That said, the nature of the

8 business model of a broker is to find the lowest

9 price. And --

10 MR. KYRIAKIS: I'm sorry to interrupt

11 you, sir. We're U.S. custom brokers, not brokers

12 of produce.

13 MR. McKINNEY: Okay. I got you.

14 Well, the question can still stand because you're

15 a close observer there. In the case -- because

16 there are brokers that work along the border and

17 ship these products both ways I might add --

18 MR. KYRIAKIS: That is correct.

19 MR. McKINNEY: -- does it still stand

20 then that if there are these subsidies, if there

21 were some investigation to uncover whether

22 subsidies exist, would that not be a good thing

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1 to be truthful, to be understanding, to unveil

2 what is the truth? Because it's a very thorough

3 process and a fair process, I think that Commerce

4 has run when those kinds of things have happened.

5 I'm just curious about your observation from your

6 vantage point.

7 MR. KYRIAKIS: Oh, yeah. Well, most

8 definitely. And again, I go back to my testimony

9 to the USMCA, and we truly believe that the

10 negotiations already settled in the USMCA covered

11 all those aspects. We trust in that. As U.S.

12 custom brokers, we are the liaisons, if you will,

13 between the U.S. importer, the Mexican shipper,

14 and the U.S. government. So it is crucial to our

15 clients that we ensure that they are abiding by

16 all laws and regulations.

17 MR. McKINNEY: Great. Thank you.

18 MR. KYRIAKIS: You're very much

19 welcome.

20 Thank you for having me.

21 CHAIR KIMMITT: Thank you, sir. And

22 we'll now welcome Mr. George Tudor from the

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1 Desert Grape Growers League California.

2 MR. TUDOR: Good afternoon. Can you

3 guys hear me? Can everybody hear me?

4 CHAIR KIMMITT: We can. Thank you.

5 MR. TUDOR: All right. Thank you.

6 Good afternoon. My name is George Tudor, and I'm

7 a table grape grower and member of the Desert

8 Grape Growers League. The league is an

9 association of table grape growers and pack-and-

10 ship owners located in Coachella Valley,

11 California. On behalf of the league's

12 membership, I thank the United States Trade

13 Representative and the Departments of Commerce

14 and Agriculture for convening this virtual

15 hearing.

16 Table grapes have the distinction of

17 being the only seasonal and perishable crop to

18 file the dumping petition and then being denied

19 relief by the U.S. International Trade

20 Commission. Even though the Department of

21 Commerce's preliminary determination -- as high

22 as 114 percent, the ITC's lack of injury

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1 determination was caused by the statutory

2 definition of industry. In short, ITC is

3 required by statute to consider the entire U.S.

4 table grape industry even though the remaining

5 table grape geographical region was not harvested

6 and marketed during the period of dumping.

7 California is home to 99 percent of

8 commercial table grape operations within the U.S.

9 and most of the unfair trade competition

10 occurring within the U.S. market is heavily

11 impacting Coachella Valley table grape growers.

12 Mexican table grapes compete directly against

13 Coachella Valley table grapes at the beginning of

14 the U.S. marketing period which is May through

15 July. The volume of Mexican table grapes in the

16 U.S. grew by a whopping 421 percent between 1994

17 and 2019.

18 Unsurprisingly, production from

19 Coachella Valley during the same marketing period

20 is estimated to have fallen by 62 percent from

21 1994 to 2019. During this period, Mexican table

22 grape acreage in Sonora grew by 235 percent while

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1 Coachella acreage fell by 62 percent. In the

2 2019 marketing season, Mexico exported 26.2

3 million boxes of table grapes to the U.S., nearly

4 a 50 percent increase from its exports in the

5 previous year.

6 We commissioned an economic injury

7 study and the evidence demonstrated injury, that

8 the statutory industry requirement prevented a

9 second antidumping petition. Similar to what

10 some of the other witnesses will or have

11 described, much of the growth in Mexico's

12 seasonal and perishable industry is attributed to

13 the Mexican government's trade distorting subsidy

14 programs. Our full comment details trade

15 distorting child labor and wage practices as

16 well.

17 Most of Mexico's support programs have

18 been administered by SAGARPA and SADER. These

19 subsidy programs have provided agricultural

20 producers with substantial capital to develop new

21 table grape plantings. Mexican government

22 support has also contributed toward the

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1 development of post-harvest management, the use

2 of genetic resources, the operation of strategic

3 projects, and other types of infrastructure and

4 equipment related to Mexico's specialty crop

5 industry.

6 All major table grape producing

7 countries export to the nearest foreign market.

8 However, Mexico has one foreign market, the

9 United States. Ninety-eight percent of Mexico's

10 table grapes are exported to the U.S. It is not

11 only destroying the Coachella table grape

12 industry but is also adversely impacting Mexican

13 grape growers and is now encroaching on the San

14 Joaquin Valley table grape industry.

15 While the concentration on the U.S.

16 market may not be an official Mexican government

17 marketing policy, past government marketing

18 promotion assistance focused on the U.S. market.

19 Foreign growers, exporters, and governments

20 understand they can dump their S&P crops into the

21 U.S. with impunity because, quite frankly, the

22 current U.S. unfair trade laws permit such

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1 practices against S&P crops. A solution could

2 have been arranged in the USMCA but Mexican

3 exporters and certain U.S. interests opposed.

4 A remedy for the S&P crops can be

5 found in the current support programs for program

6 crops. These support programs have been vetted

7 and endorsed by Congress and previous

8 administrations. Broadly, the U.S. farm programs

9 provide support if the crops price is below a

10 reference price.

11 Importantly, the programs do not

12 interfere with global trade. Similar to the

13 grain Price Loss Coverage program, the S&P crop

14 will receive compensation from the CCC based on a

15 reference price. The big difference between

16 grains and S&P crops is the ability for grains to

17 be stored whereas S&P crops cannot be stored.

18 Another successful program is crop

19 insurance. With the support of the federal

20 government, S&P crops could have a program that

21 would activate when imports cause low market

22 prices. Our proposals will not in any way

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1 prohibit imports nor should it encourage the

2 government of Mexico to retaliate or disrupt

3 supply to the market. Additionally, we support

4 H.R. 101 with amendments.

5 In closing, California table grape

6 growers are amongst the U.S. farmers being harmed

7 by imported S&P crops that are subsidized and

8 dumped. But the information shared in these

9 original hearings has the potential to create

10 meaningful solutions for not only our table grape

11 growers, but other specialty crop producers as

12 well. The league appreciates this opportunity to

13 appear today and requests that our comments be

14 carefully considered. Thank you.

15 CHAIR KIMMITT: Thank you, Mr. Tudor.

16 I think we have time for one question. Assistant

17 Secretary Kessler has one.

18 MR. KESSLER: Yes. Thank you very

19 much for your testimony, Mr. Tudor. And I

20 appreciate your comments about the injury

21 requirements, and I understand that you're

22 supporting potential changes to the injury

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1 requirements to make trade remedies more

2 accessible for producers of seasonal and

3 perishable products. My question to you is, can

4 you specify what type of relief you're seeking?

5 Are you asking for duties on imports? Are you

6 asking for something else?

7 MR. TUDOR: Well, we'd prefer that the

8 S&P program that USTR submitted to WTO in 2006 or

9 H.R. 101, the Defending Domestic Produce

10 Production Act, those are our preferences. But

11 without these programs, we recommend these other

12 programs that have been vetted by the government

13 and do not give reason to apply tariffs. They

14 just simply determine a reference price. And if

15 it's below that price, then the government issues

16 the change per box to the grower -- the

17 difference per box to the grower.

18 CHAIR KIMMITT: Thank you, Mr. Tudor.

19 Appreciate your testimony today. We'll now

20 welcome our last witness of this Session 2, Mr.

21 Kent Stenderup from Delano Growers Grape Products

22 Cooperative.

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1 MR. STENDERUP: Good morning, or

2 should I say good afternoon? Mr. Ambassador and

3 members of the panel, thank you for holding this

4 hearing. My name is Kent Stenderup, and I'm the

5 managing partner of Stenderup Ag Partners, a

6 family-owned farm in Arvin, California.

7 I'm here today as the Director of the

8 Delano Growers Grape Products Cooperative,

9 organized in 1940. This is our 80th year. We

10 are the major producer of white grape juice

11 concentrate in the United States. White grape

12 juice concentrate is used as a natural sweetener

13 and ingredient in a number of processed food and

14 juice products.

15 More than 25 percent of our market is

16 for kosher products and a significant portion

17 goes into products through school lunch programs

18 and feeding programs. Unfortunately, Delano is

19 one of the few remaining producers in the United

20 States due to the unfairly traded product coming

21 from Argentina. So we're going to go south of

22 the equator here.

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1 Processing grapes in a juice

2 concentrate provides an important economic

3 stabilizer for the California grape industry. In

4 addition to providing a market for dedicated use

5 grapes, it also absorbs a supply of other grapes.

6 It provides a positive return to growers.

7 In 2019, landed costs for duties of

8 Argentinian grape juice concentrate averaged

9 approximately 2 dollars per gallon below U.S.

10 product. That represents a 25 percent discount.

11 Further, imports from Argentina or a similar

12 discount to the East Coast landed costs of

13 products from Spain which is the other major

14 global producer and exporter. Such a discrepancy

15 would not occur without Argentina's market

16 distorting intervention into the country's grape

17 market.

18 Argentina has a mandatory quota for

19 the diversion of wine grapes into the production

20 of grape juice concentrate. That juice

21 concentrate is being dumped on the export market.

22 The OECD, Organisation for Economic Co-operation

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1 and Development, has described this policy as a

2 way to regulate the total production of wine and

3 to support the prices of wine and wine grapes.

4 In doing so, it subsidizes the

5 overproduction of juice concentrate for which

6 there is little domestic market in Argentina and

7 so it's dumped in the export market. It's been

8 going on since 1994. But the situation is

9 getting worse. Measured as a percent of wine

10 production, grape juice production grew from 23

11 percent in 2017 to 30 percent in 2018 and 42

12 percent last year.

13 The quota for grapes diverted to juice

14 production was set at nearly 30 percent of total

15 grape production in 2019. According to USDA,

16 that is up from 18 percent as recently as 2014.

17 Exports of -- grape juice concentrate to the

18 United States increased 60 percent, 60 percent

19 over the first 11 months of 2019 according to

20 U.S. Commerce Department data.

21 This policy scheme artificially

22 discounts the cost of producing white grape juice

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1 concentrate which is diverted into export and

2 undermines the market for this globally traded

3 product. Although the program differs in its

4 application, this quota system has the same

5 economic trade exports as Argentina's

6 differential export tax system has on the exports

7 of biodiesel. As you well know, the U.S. imposed

8 countervailing duties on Argentine biodiesel.

9 Additionally, Mr. Ambassador, in 2019,

10 the Province of Mendoza implemented a self-

11 described multi-year market stabilization plan

12 known as the anticyclical wine fund, FAB, which

13 adds a financial subsidy to juice concentrate

14 production. The Province of Mendoza counts for

15 more than two-thirds of the grape production in

16 Argentina. This leads U.S. producers to further

17 undercut the U.S. market.

18 Today, there's a duty on imports of

19 grape juice concentrate from Argentina of 66

20 cents per gallon. But that is a specific duty

21 that has been in place for 25 years or more and

22 does not take place with inflation adjusted U.S.

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1 and global market prices. This is not an ad

2 valorem tariff which is levied on a percentage of

3 sales price and would better reflect the

4 construct that's been in place since 1994.

5 In the late 1990s, U.S. production of

6 white grape juice concentrate was 30 million

7 gallons domestically. Currently, it is less than

8 10 million gallons, largely due to unfairly

9 traded imports from Argentina. Argentina must be

10 held accountable for its manipulation of the

11 export market and its subsidies and dumping must

12 be stopped through trade remedies provided under

13 U.S. trade law. Thank you again for this

14 opportunity to testify.

15 CHAIR KIMMITT: Thank you, Mr.

16 Stenderup. I think we have time for a few

17 question. I'll turn it over to Ambassador Doud.

18 MR. DOUD: Thank you, sir. Some very,

19 very interesting testimony here. Talk if you

20 would for a moment about how this is affecting

21 the profitability of your operation. In the last

22 few years, what's happened and what do you see

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1 going forward?

2 MR. STENDERUP: Well, they're

3 manipulating their supply in subsidizing and

4 supporting the wine side of it. So they come

5 here and they dump it, and they're bringing it in

6 landed whether it's East Coast or West Coast at a

7 price that we can't even beat as far as our

8 production side of it. This impacts whether it's

9 table grapes, wine grapes themselves if it's the

10 right type of variety, and also the raisin grape.

11 And as you know, the wine industry in

12 particularly California is in trouble and having

13 a tough time right now. This impacts the grapes

14 from Coachella to Napa literally. Did I answer

15 your question, Ambassador?

16 MR. DOUD: Yes. Thank you.

17 CHAIR KIMMITT: Under Secretary

18 McKinney, do you have a question for Mr.

19 Stenderup?

20 MR. McKINNEY: I do. First, that was

21 very interesting. And so thanks for being here

22 and airing your thoughts. We've heard some

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1 different ranges of options that would fix the

2 problem. We heard a number of them, notably a

3 301 investigation from our friends in Florida.

4 And to the person just on, we heard of some

5 possible adjustments in what I'll call farm

6 programs or U.S. government programs. What would

7 best address your issue? What's the best scratch

8 that takes care of your itch? If you dial that

9 in just a bit more.

10 MR. STENDERUP: Well, that's almost

11 like a softball. Thank you for throwing that one

12 at me. I have a solution. We can get this done

13 by sundown if you guys want to, and it can be

14 done.

15 So go back to an ad valorem tax, a

16 percentage using the base. This is during the

17 Clinton Administration. Nobody can complain

18 about that. Go back to the -- it's basically 17

19 percent of the market value back in 1994 is what

20 they based it on.

21 And so we apply 17 percent today of

22 what the market price is. So that was 4 dollars

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1 back then. The market price today would be 8

2 dollars and then using the same percentage that

3 was instigated in 1994. Is that simple enough,

4 or is that too simple that it won't work?

5 MR. McKINNEY: Short and sweet. I'm

6 not sure we'll deliver on that today, but

7 appreciate the succinctness. Thank you.

8 CHAIR KIMMITT: And I think we have

9 time for one last question from Assistant

10 Secretary Kessler if he has one.

11 MR. KESSLER: Sure. Well, thank you

12 very much for your testimony. You presented some

13 very interesting information about foreign

14 subsidy practices and unfair trade practices.

15 Can you expand a little bit on the effect that

16 you believe those subsidies have had on your

17 company and the U.S. industry as a whole, the

18 U.S. grape industry? Do you see the U.S.

19 industry as being in an injured state?

20 MR. STENDERUP: Yes, I do. I believe

21 the wine industry has been injured by it and also

22 by other commodities that may or may not make a

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1 concentrate, whether it's apple or pear. Now we

2 had the benefit with our white grape juice

3 concentrate. We're colorless and flavorless.

4 That can't be said for apple and pear.

5 But they're also -- so it's somewhat

6 of a different ingredient. They would be

7 impacted -- they're impacted by I think it's --

8 whether it's Chinese apple or Chinese pear, but

9 that's a different discussion. It's just talking

10 about concentrate in general.

11 So there's a certain level -- group of

12 apples or pears that go into the concentrate

13 business. They're not -- obviously not the best

14 ones, number two maybe or something. And that's

15 basically what we're doing. Just some of it's

16 what we're doing with grapes also, the table

17 grape side of it. So is that close?

18 CHAIR KIMMITT: Great. Thank you, Mr.

19 Stenderup. I appreciate your testimony. This

20 concludes our second session of the day. We will

21 now break for lunch and we'll reconvene at 1:00

22 o'clock.

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1 (Whereupon, the above-entitled matter

2 went off the record at 12:31 p.m. and resumed at

3 1:03 p.m.)

4 CHAIR KIMMITT: Hi. Welcome back,

5 everyone. The USTR is still dealing with some

6 technical issues. It's the same thing that

7 happened this morning. The program we're using,

8 BlueJeans, is going to effectively reset and it's

9 going to kick everybody who's currently watching

10 -- participating and watching from home off the

11 system. And then we're going to restart it which

12 would hopefully solve the issue for the rest of

13 the day.

14 But unfortunately, it will kick

15 everyone off and there will be a new link to

16 rejoin, available on USTR's website. And so

17 you'll probably get kicked off sometime in the

18 next five to ten minutes and then we will restart

19 with testimony at around 1:15. Thank you again

20 for your patience.

21 (Whereupon, the above-entitled matter

22 went off the record at 1:04 p.m. and resumed at

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1 1:19 p.m.)

2 CHAIR KIMMITT: We are back, everyone.

3 Apologies for the technical delays. Appreciate

4 you bearing with us.

5 We will now begin Session 3 of today's

6 hearing. Obviously, we are a little behind

7 schedule.

8 I will try to get us back on track a

9 little bit but will do my best to make sure

10 everybody gets their fair amount of time.

11 With that, I would like to welcome our

12 first witness of Session 3, Mr. Jerome Crosby, on

13 behalf of the Georgia Blueberry Commodity

14 Commission.

15 MR. CROSBY: Thank you, gentlemen, for

16 the opportunity to (audio interference) today on

17 a matter of profound importance.

18 Hello? Are we live?

19 CHAIR KIMMITT: Yes, we are (audio

20 interference) live, sir.

21 MR. CROSBY: (Audio interference)

22 holding the hearing and giving us an opportunity

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1 to speak.

2 Today, I am speaking to you not only

3 as a farmer but as the chairman of the board of

4 the Blueberry Commodity Commission and a board

5 member of the Georgia Fruit & Vegetable Growers

6 Association.

7 Since 2005, our farm has grown both

8 highbush and rabbiteye blueberries, and our

9 harvest window is from late March through July

10 the 4th on an annual basis, and we harvest both

11 fresh and frozen blueberries with hand labor and

12 mechanical harvesters.

13 For several years, we tried to grow

14 produce such as squash and pepper varieties but

15 we just couldn't compete against the imports and

16 had to give it up.

17 My apologies for being blunt today,

18 but everyone involved in this hearing had to know

19 that excluding fresh fruit and vegetables from

20 some type of seasonal protection in the USMCA

21 agreement would be detrimental to the economy of

22 Georgia blueberries and other fresh products

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1 grown in our state, and there is a reason why the

2 Mexican negotiators called the U.S. proposal to

3 provide seasonal protection a, quote, deal killer

4 and they were willing to walk away from the

5 table.

6 As you've heard in previous testimony,

7 Mexican farmers and the Mexican government had

8 invested heavily in subsidized blueberry

9 operations in Mexico and they knew that those

10 farms would begin to reach peak production in the

11 last few years and, in particular, in 2020.

12 I am not certain how -- where we were

13 as U.S. negotiators of the impact that was coming

14 to the Georgia blueberry growers.

15 And as you are also probably aware, on

16 July the 22nd, when you announced that these

17 hearings would be virtual, there was a meeting of

18 the Mexican government delegation and they issued

19 a threatening statement saying that any action by

20 the U.S. government to correct this unfair trade

21 issue would be deemed an underhanded practice by

22 them.

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1 As you can imagine, this statement is

2 ridiculous and it's offensive to Georgia

3 blueberry growers. We actually built the market

4 that these imports are now targeting.

5 And we have been telling Washington

6 about Mexico's unfair trading practices for

7 several years. We raised it when the USMCA

8 negotiations began and we proposed a solution to

9 the issue.

10 Our solution was to give us access to

11 the trade laws. We did not ask for a guarantee

12 that we would win any anti-dumping case or that

13 we would win a countervailing duty case.

14 We asked for the ability to file a

15 case, not a nominal ability but an actual ability

16 to file a case, and now Mexico is suggesting that

17 we do not have -- should not have access to these

18 trade laws.

19 Due to the time constraints, I can't

20 read my full written statement. I understand you

21 gentleman have a copy of it, and I beg of you to

22 read it.

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1 It contains some important

2 information, some good data. Three key points

3 that I would like to make to you is, number one,

4 Mexican imports increased 68 percent in one year.

5 From 2019 to 2020, Mexican imports

6 grew by 17 million pounds in the Georgia window

7 alone in a 14-week period.

8 At the same time, Georgia lost 25

9 percent of its market. We went down 10 million

10 pounds in sales from 2019 to 2020, and during

11 that same 2019-2020 period, one year, the price

12 Georgia growers received for the fruit that we

13 were able to sell dropped between 24 and 48

14 percent year over year across that 14-week

15 period.

16 During the final phases of the USMCA

17 negotiations, the Georgia farmers agreed to

18 withdraw our adamant opposition to the USMCA in

19 return for your promise to work to protect us

20 from damages with imports.

21 Unfortunately, those damages have

22 already arrived and are continuing to grow, and

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1 let me be clear. We need an immediate and

2 resolute response from USTR to save our blueberry

3 industry in Georgia.

4 The USTR's plan should be clear and

5 should consist of specific actions the U.S.

6 government will take and I hope that the USTR is

7 giving serious thought to the original ideas we

8 first presented to Ambassador Lighthizer when

9 USMCA negotiations began.

10 Small-farm commodities need help

11 identifying when and how to bring trade cases to

12 defend our interests. As a whole, the U.S. fruit

13 and vegetable sector consists mostly of small

14 farmers who grow a various array of different

15 commodities, and it is hard for us -- it's harder

16 for us than other farm sectors to build and

17 maintain a permanent industry infrastructure that

18 monitors what other governments are doing in so

19 many different commodities and defend ourselves,

20 and this is something that we feel the federal

21 government, especially our trade policymakers at

22 USTR, could help us do better.

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1 We need your help in identifying when

2 a dumping or countervailing investigation should

3 be considered. Larger industries have teams of

4 lawyers and economists to help them make those

5 decisions. Small fruit and vegetable farmers

6 don't. We have you, and we need you to step in

7 and help us.

8 With that in mind, I am asking you to

9 consider putting together a task force under the

10 existing trade enforcement offices at USTR to

11 help our industry and those like us get justice

12 from our own trade laws and, again, I would

13 encourage you to read my full written statement

14 in detail for some additional information.

15 Thank you for your time today.

16 CHAIR KIMMITT: Thank you, Mr. Crosby.

17 I appreciate your testimony.

18 I think, to get back on schedule, we

19 will have time for one question and I'll turn it

20 over to Assistant Secretary Kessler if he has

21 one.

22 MR. KESSLER: Okay. Thank you very

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1 much. Thank you, Mr. Crosby, for that testimony.

2 You know, I think -- I would just

3 invite you, if you would, to expand on the

4 damage, the injury, that you are describing for

5 Georgia blueberry farmers.

6 You know, I know that in your written

7 testimony you have information about prices and

8 volumes. Are there any other metrics or any

9 other information you can provide to illustrate

10 the harm that you and other blueberry growers are

11 experiencing?

12 MR. CROSBY: Well, the three charts

13 that I included in my written statement do

14 provide a -- I think, about a several-year trend

15 of what has happened with volume movement and

16 pricing.

17 There is a significant, documented

18 increase of Mexican imports based on USDA data.

19 There is a documented decrease in price based on

20 USDA data.

21 Personally, on my farm, without

22 providing specific details, I can just tell you

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1 exactly that over the last three years in

2 particular, we are seeing year over year price

3 decreases earlier in the season and we are seeing

4 pushback on demand as the most -- the most

5 damning evidence that I gave you is that in a 14-

6 week period from 2019 to 2020 you see Georgia

7 lose 10 million pounds of sales while Mexican

8 imports increased 19 million pounds of sales at a

9 reduced price.

10 We are also competing with labor that

11 in Mexico is about one-tenth the cost of what it

12 is here under United States laws with H-2A

13 programs that mandate what I have to pay

14 harvesters in the field.

15 MR. KESSLER: Thank you.

16 CHAIR KIMMITT: Thank you, Mr. Crosby.

17 I appreciate your testimony.

18 We will now welcome Ms. Brittany Lee

19 from the Florida Blueberry Growers Association.

20 MS. LEE: Hi. Good afternoon, and

21 thank you for giving me the opportunity to speak

22 with you all today.

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1 My name is Brittany Lee and I am the

2 executive director of the Florida Blueberry

3 Growers Association, an organization that

4 represents the hardworking blueberry growers

5 throughout the state that are dedicated to

6 growing fresh, high-quality blueberries for our

7 consumers.

8 I appreciate the opportunity to

9 address how our industry has been affected by

10 Mexico's unfair trade practices for years, even

11 more significantly in the last several years.

12 I am a blueberry grower myself, so

13 this issue directly hurts my family farm just as

14 it does the other 920 farms that grow blueberries

15 in the state of Florida.

16 Florida is a cornerstone of domestic

17 blueberry production. We are the first state to

18 produce blueberries every year, harvesting

19 between March and May, and our Florida blueberry

20 growers are dedicated to growing a sustainable

21 and ethically-sourced superfood for our

22 consumers.

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1 With a significant impact on Florida's

2 economy, our farms employ over 2500 full time

3 jobs every year and we generate an economic

4 impact of over $925 million. I am sorry, $295

5 million.

6 The massive amounts of Mexican

7 blueberries surging into the U.S. every spring

8 are crippling the southeast domestic blueberry

9 industry.

10 Florida blueberry growers and growers

11 of other seasonal produce have never had a

12 mechanism to combat Mexico's unfair trade

13 practices.

14 We remain vulnerable and we remain

15 unprotected. Mexico's U.S. market share

16 continues to increase dramatically and we

17 continue to suffer.

18 Recent massive and heavily subsidized

19 plantings in Mexico continue to threaten the

20 livelihood of our Florida producers.

21 From 2009 to 2019, Mexico's U.S.

22 market share of blueberries increased by 2,111

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1 percent. By contrast, Florida's market has

2 decreased over the last several years.

3 The culprit is one. It is Mexico's

4 millions of dollars in government subsidies that

5 create artificially low prices for its produce.

6 To exacerbate the situation, from

7 January to April of this year, while Florida

8 blueberry farms were taking sales loss from the

9 U.S. food service shut down, caused to the --

10 because of the coronavirus pandemic, Mexico

11 shipped an additional 1.5 million flats of

12 blueberries into the U.S., increasing their U.S.

13 market share by 64 percent in that period.

14 Florida blueberry growers continue to

15 experience undue hardship as a result of Mexico's

16 unfair trading practices.

17 My family farm is well on its way to

18 becoming a casualty of this and eventually it

19 will be the reason that my family business and

20 others are forced out of commercial production.

21 Most of us have worked our entire

22 lives to provide a legacy for our family and

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1 build a business that can be passed from

2 generation to generation.

3 However, the current climate where

4 Mexican blueberries are being sold significantly

5 below the price that it costs to grow, pick, and

6 pack our blueberries here in Florida is

7 absolutely crippling our Florida blueberry farms.

8 It is crippling my family farm, and we

9 are unable to sustain our businesses.

10 Our industry supports free trade. But

11 it has to be fair. Our growers simply want an

12 even playing field and an opportunity to continue

13 our family operations, to remain in production

14 agriculture, invigorate the economy, and to

15 provide a safe healthy superfood for our

16 consumers.

17 On behalf of the blueberry industry,

18 we respectfully urge USTR to initiate a fair and

19 reasonable solution that will protect the Florida

20 blueberry industry before Mexico completely

21 pushes us out during our limited market window.

22 Thank you very much.

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1 CHAIR KIMMITT: Thank you, Ms. Lee.

2 I think -- I think we have time for

3 one or two questions and I will turn it over to

4 Ambassador Doud.

5 MR. DOUD: Brittany, good to see you.

6 Thank you.

7 MS. LEE: Yes, sir. How are you?

8 MR. DOUD: Good, and thank you for

9 your testimony here today.

10 I am particularly interested in your

11 comment about the government of Mexico and its

12 millions of dollars in subsidies to its

13 producers. Do you have a documentation of this

14 and how those programs operate in Mexico?

15 MS. LEE: I do, and I believe it was

16 -- I believe it was uploaded by the previous

17 presenter. It was an overview of the Mexican

18 blueberry industry by Feng Wu and Zhengfui Guan

19 by the University of Florida. I believe it's

20 been uploaded into the exhibit registry.

21 MR. DOUD: Okay. So it's the same --

22 you're referring to the same stuff. Got it.

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1 Okay. Thank you.

2 MS. LEE: Yes. Yeah.

3 CHAIR KIMMITT: I think we have time

4 for one more question, if Under Secretary

5 McKinney has one.

6 MR. McKINNEY: Let me go off mute.

7 Well, first, thank you very much and

8 I want you to know that I have enjoyed not only

9 the one, but two, conversations.

10 It may have been with your colleague

11 from Georgia but as we work at the FAS to find

12 new markets, and I think just by chance you may

13 have heard and read that just in the last five

14 months we have found new access to three new

15 countries and I think we have already begun

16 connecting blueberry growers with potential

17 buyers there.

18 I know we missed the season here, but

19 it's the course of how things go in other

20 countries. So please know that.

21 I wanted just to hear from you, many

22 of your colleagues have been advocating for a 301

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1 investigation.

2 Is that where you are or are there

3 other mechanisms, other tools that you would see

4 as remedy for this? Can you elaborate?

5 MS. LEE: Yes, sir. I believe that a

6 301 is the most appropriate remedy at this time.

7 I understand that at one point if that's

8 initiated and somewhere down the road a 201 is

9 suggested for blueberries specifically we would

10 love to explore that at that juncture.

11 But I think right now we agree with

12 our industry partners and the rest of agriculture

13 in Florida, and 301 is the most prudent solution

14 for us.

15 MR. McKINNEY: Okay. Thank you.

16 MS. LEE: Thank you, sir.

17 CHAIR KIMMITT: Thank you, Ms. Lee.

18 We will now welcome Mr. Michael Hill

19 from H&A Farms.

20 MR. HILL: Thank you all for the

21 opportunity to be here talking with you today.

22 I'll be -- I'll be quick.

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1 My name is Michael Hill with H&A

2 Farms. We are a grower and packer of fresh

3 blueberries located in central Florida.

4 I am a fourth generation grower,

5 something that our family is tremendously proud

6 of. I have two young children who dream of one

7 day working on our family farm, and based upon

8 the current state of Florida agriculture, I am

9 advising my children not to follow the path of

10 our family history.

11 Our market prices have continued to

12 fall year after year due the direct impact of

13 increased volume pouring into our market by the

14 imported blueberries.

15 When my family and I started growing

16 blueberries 10 years ago, Mexico was importing

17 less than 1 million pounds annually. Mexico is

18 now shipping over 100 million pounds annually in

19 which the timing falls directly into our domestic

20 blueberry season.

21 Based on our research and market

22 knowledge, they will be producing and shipping

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1 around 200 million pounds to the U.S. market

2 within the next three to five years.

3 Their government has subsidized the

4 input of infrastructure on their farms including

5 the installation of irrigation, wells, and

6 protective planting such as hoop houses, just to

7 name a few.

8 Their production costs are far less

9 than ours, including drastically reduced labor

10 costs, which is one-twelfth of our share in

11 Florida.

12 Florida's fresh blueberry labor costs

13 account for 70 percent of our total cost to grow,

14 harvest, and pack our product.

15 The fundamental reason why specialty

16 crop production is highly susceptible to import

17 pressures and different -- and commodity crops is

18 because specialty crops are immensely labor

19 intensive.

20 Commodity crops within the U.S. are

21 harvested almost solely using machinery.

22 Therefore, when our main import competition is

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1 growing the same crop, selling in the same market

2 window, with the help of their government through

3 infrastructure, in addition to having drastically

4 reduced labor costs comparatively, we are no

5 longer a sustainable industry within our own

6 country.

7 The situation we find ourselves in

8 with our import counterparts is not at a level

9 playing field and the main reason why the future

10 of our domestic produce supply is in jeopardy.

11 Farming is vital to our success as a

12 country, both economically and socially. I am on

13 the front lines of this battle day in and day out

14 and I can tell you first hand that we are losing

15 the war.

16 I support free trade. However, the

17 topic of this conversation rests solely on fair

18 trade. Farmers are very humble, silent, and

19 stubborn by nature and we rarely voice our

20 concerns.

21 If import pressures for specialty

22 crops in Florida continue to rise, we will soon

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1 be completely reliant upon other countries like

2 Mexico for our food supply and our great state of

3 Florida will lose one of its most cherished,

4 historic, and invaluable industries, agriculture.

5 So that was my testimony that you all

6 received, and so I am talking to you as a grower.

7 We have -- we have money in the field day in and

8 day out.

9 A hundred percent of our income rests

10 on the crops that we grow, and when I talk to

11 you, I am talking to you on account of 920 other

12 of our Florida farms.

13 California is also being affected by

14 this on their blueberry front. They are in the

15 market window that Mexico is producing as well.

16 Georgia is being affected. North Carolina is

17 being affected.

18 There is eight major regions in our --

19 in the U.S. that -- or states that are producing

20 blueberries and only one of them is not affected

21 by imports.

22 As I said, Mexico, we believe, will be

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1 increasing by 30 percent year over year within

2 the next three to five years, and if that

3 happens, there's just not enough demand to handle

4 that kind of supply.

5 From a real day-to-day, you know, you

6 -- I think, Secretary Kessler, you had asked Mr.

7 Crosby how it's affecting us day to day, and to

8 give you an example, when I look at our cash flow

9 projections when we go, I take a minimum of 15

10 percent price decrease every year until I can see

11 something different.

12 I've been down to Mexico. I have seen

13 how much they are planting. And when I came back

14 I've never been as scared as I was when I came

15 back two years ago from spending two weeks down

16 there.

17 This is a real deal. There's farmers

18 every day that are -- that are just stopping,

19 giving up, because they see the train coming down

20 the tracks and you either get run over or you get

21 off.

22 So I think that's five minutes for me.

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1 If you have any questions, I'd love to answer

2 them.

3 MR. DOUD: Mr. Hill, thank you for

4 your testimony and I think you just answered a

5 big chunk of my question. I was wondering about

6 your 200 million pound estimate and where it came

7 from.

8 I think you indicated some of that is

9 you've been to Mexico and seen it. Is that 200

10 million pounds just Mexico or is it other

11 countries as well?

12 MR. HILL: No, that's just -- that's

13 just Mexico. They are, roughly, at about 100

14 million now. Like I said, over 10 years they

15 were less than 1 million. They are going to be

16 at around 200 million.

17 There's other countries that are

18 increasing at the same rates. Peru is one that's

19 going to be -- you know, they are already at 200.

20 They've gone from zero to 200 million

21 in six years. I think they are going to be at

22 350 million within the next two to four. So it's

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1 a big front.

2 CHAIR KIMMITT: I think we have time

3 for one more question. Perhaps if Assistant

4 Secretary Kessler has any follow-up.

5 MR. KESSLER: Sure. Well, thank you

6 for your testimony, and you did anticipate some

7 of my questions there.

8 But I guess I would invite you to

9 expand a bit more on the harm that either your

10 company in particular or other companies are

11 suffering.

12 You know, you mentioned that companies

13 are exiting the business. I don't know if you're

14 seeing the size of the workforce shrink overall,

15 either at your farm or across the industry.

16 I don't know if you have data on

17 profitability, for example, or ability to make

18 new investments.

19 I'd be interested in any of that, and

20 I think, you know, your testimony also raised a

21 question in my mind as to whether you believe

22 that blueberry growers in other states, other

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1 regions, support the same type of action from the

2 administration that you're asking for. So I'd

3 like your comments on that as well, too.

4 Thank you very much, sir.

5 MR. HILL: Yeah, absolutely.

6 Yeah. So when we started growing the

7 prices were about twice -- this was 10 years ago

8 -- about twice as what they have been now.

9 So and just about every other

10 industry, you see everything on the shelves at

11 Walmart or Amazon or however you want to do it,

12 everything is normally increasing in price

13 because we have inflation, and our prices have

14 continued to fall.

15 We have never seen a year where the

16 prices go up and that is solely -- and the demand

17 of blueberries has increased but the supply has

18 been over about 7 percent more than demand every

19 single year.

20 So we have seen, roughly, a 10 to 15

21 percent fall year after year in pricing. So

22 whenever you're in a trend like that -- and then,

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1 for example, on the ballot coming up in Florida

2 is a $15 an hour minimum wage to go into effect.

3 If that happens, we use H-2A, which is

4 an increase over $15 an hour because we have to

5 pay to bring them in. We have to pay to house

6 them. We have to pay to feed them. We have to

7 pay to bus them.

8 You are now looking at an increased

9 labor cost of around 25 percent overnight right

10 there, coupled with the fact that you're having

11 decreased pricing and then the costs of

12 fertilizer is increasing.

13 The cost of land is increasing. All

14 the costs around us are increasing. Our prices

15 are decreasing. So profitability 100 percent has

16 taken a hit, and most growers are operating at

17 losses.

18 And so we are being -- the most simple

19 way to put it is we are literally being pushed

20 out, and the biggest thing is is we can provide

21 the demand needed that the U.S. wants. We can

22 provide it.

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1 We just -- at the trend that we are

2 seeing why would we invest in it? Because, you

3 know, we are being pushed out and it's just -- we

4 can't operate on these -- on these numbers.

5 So and we can provide a safe product

6 as well. Our food safety that we do here in the

7 U.S. is far superior than anywhere else and I

8 will say that -- you know, I will hang my hat on

9 that.

10 We invest time and time again in the

11 safety of our food and we have the top measures

12 that we put into place in our facilities, into

13 our fields, which comes at an increased cost, you

14 know. But we are making sure we are doing that

15 to keep the product safe.

16 But, anyways, I know I expanded a

17 little bit more there. But, hopefully, I

18 answered your question.

19 MR. KESSLER: Yes, thank you.

20 CHAIR KIMMITT: I apologize. We at

21 USTR are having a little bit of issue hearing

22 you. But I think you were able to finish your

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1 answer and I appreciate your testimony here

2 today, Mr. Hill.

3 We will now turn to and welcome Mr.

4 Kenneth Parker from the Florida Strawberry

5 Growers Association.

6 MR. PARKER: Good afternoon, Mr.

7 Ambassador, Mr. McKinney, Mr. Secretary. Good to

8 see you all.

9 I am Kenneth Parker. I am the

10 executive director of the Florida Strawberry

11 Growers Association. FSGA represents the vast

12 majority of strawberry growers in Florida, the

13 largest domestic region for winter production of

14 fresh market strawberries.

15 Family farms dominate the Florida

16 strawberry industry with continuous production in

17 our region for over 130 years.

18 FSGA appreciates the opportunity to

19 offer testimony regarding the trade-distorting

20 policies that have been affecting Florida

21 strawberry growers and other seasonal and

22 perishable producers in the United States.

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1 As such, the information and economic

2 data on the record highlight the magnitude of the

3 headwinds Florida strawberry growers have been

4 facing.

5 I, therefore, respectfully ask USTR to

6 launch a Section 301 investigation and redress

7 these concerns.

8 Strawberries from central Mexico share

9 the same growing season as Florida strawberries.

10 As a result of the unfair trade advantages

11 documented by Dr. Guan at the University of

12 Florida and the Florida Department of

13 Agriculture, fresh strawberry imports from Mexico

14 have increased 417 percent between the years 2000

15 and 2019 and, while Florida's strawberry growers

16 lost 36 percent in market share in that same time

17 frame, Mexico increased 264 percent in market

18 share.

19 These dramatic increases of imported

20 strawberries from Mexico present a clear and

21 present danger to the sustainability of the

22 Florida industry, placing at peril family farms

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1 in production for generations and the ability to

2 provide domestically produced winter strawberries

3 for our nation at large.

4 The unprecedented growth of the

5 Mexican strawberry industry has been enabled to a

6 great degree by significant subsidy support from

7 the Mexican government and other unfair trading

8 practices.

9 These support programs have helped

10 Mexican producers become the dominant U.S.

11 supplier of produce and are progressively pushing

12 growers out of business.

13 As a result of the unfair trade

14 practices, the value of U.S. imports of Mexican

15 strawberries increased by over 1600 percent

16 compared to Florida's 67 percent increase.

17 Lower cost of production and other

18 incentives enabled by massive government

19 subsidies have catapulted Mexican fruit and

20 vegetable production at a disproportionately

21 accelerated pace that would not have been

22 possible under normal market conditions.

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1 Enormous infusions of capital and

2 other Mexican government benefits through the

3 various subsidy schemes have been injurious to

4 Florida producers.

5 As Mexico's unfairly traded shipments

6 have entered the U.S. market unabated in the last

7 several years, Florida producers of strawberries

8 and similar crops have had no trade tools to

9 redress unfair trade practices.

10 This has been the case, even though

11 TPA laws have demanded the U.S. government to fix

12 the problem.

13 We thank Ambassador Lighthizer for

14 committing in the January 9, 2020 letter to

15 launch a trade case that will redress this

16 problem on a timely and effective basis.

17 At the end of the day, without that

18 action, the economic livelihood of Florida

19 strawberry growers and their communities will

20 remain in jeopardy.

21 In conclusion, as our sector and so

22 many other produce sectors in Florida have made

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1 clear, because unfairly-traded imported

2 strawberries from Mexico threaten the

3 sustainability of the winter strawberry

4 production in our nation, we need this trade case

5 as a matter of urgency.

6 FSGA is committed to continuing to

7 coordinate with the administration to make that

8 happen. You have listened to expert testimonies

9 and looked at graphic data points that clearly

10 paint a vivid picture on your mind of how

11 targeted subsidized imports have negatively

12 impacted Florida growers.

13 However, no one knows, understands, or

14 feels the pain better than the farmers

15 themselves. Let me leave you with this

16 reoccurring quote.

17 We are not looking for a handout, just

18 a fair chance in the fight.

19 Thank you.

20 CHAIR KIMMITT: Thank you, Mr. Parker.

21 Under Secretary McKinney, do you have

22 a question for Mr. Parker?

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1 MR. McKINNEY: Yes. I don't want to

2 blow by what you've said because many have said

3 it and I've taken the notes, and so get that --

4 check that box with ink.

5 I want to talk about the purchasers of

6 your product. I have to think that there's a

7 number of retailers in the U.S. that would be

8 buying and many of them are very proud of their

9 U.S. ties, you know, and so forth.

10 Is there any play that we should all

11 be thinking about? And I am saying this because

12 we have the trade promotion types of programs.

13 Are there any efforts that we should

14 be undertaking in the trade promotion area that

15 could differentiate U.S. strawberries from

16 Mexico? Or is that just folly? Is that just not

17 worthwhile? Any commentary?

18 MR. PARKER: Thank you for the

19 question, and yes, sir. You know, there are

20 several programs including the Fresh From Florida

21 movement and Buy Local. All of those things seem

22 to resonate well with many consumers.

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1 But at the end of the day, even though

2 we have -- there are many tremendous partners at

3 the retail level that have remained very loyal to

4 Florida during our season, at the end of the day

5 when you look at the size of the country and the

6 footprint in which we ship product to, it's a

7 supply and demand issue.

8 By and large, many of the -- many of

9 the brokers are -- not the brokers, but many of

10 the buyers that we do business with, you know,

11 they are being bombarded by prices coming out of

12 central Mexico in our time frame and it's holding

13 our prices down.

14 MR. McKINNEY: Yeah.

15 MR. PARKER: Supply and demand is

16 going to rule the day. Even though we do have

17 successful programs -- Buy Local and Fresh From

18 Florida -- you know, we are on the southeastern

19 peninsula -- well, we are in central Florida but

20 in the southeastern part of the country, we are

21 still the most locally produced strawberries in

22 the winter months to two-thirds of the population

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1 of the United States.

2 So yes, that does resonate well and we

3 will continue to push that message, and if you

4 all want to tweet that out, we would be happy for

5 you all to do so also.

6 MR. McKINNEY: Well, thanks.

7 And, again, I want to make sure you

8 understand I did get your core message. I didn't

9 mean to blow by it. I just had not heard any

10 discussion about downstream marketing. So thank

11 you for taking that up.

12 MR. PARKER: Thank you.

13 CHAIR KIMMITT: Assistant Secretary

14 Kessler, do you have any questions for Mr.

15 Parker?

16 MR. KESSLER: Yes. Thank you, Mr.

17 Parker, for your testimony. I'd like to know --

18 I am going to pose a question similar to one that

19 I posed earlier to another witness.

20 I'd like to know exactly what kind of

21 relief you're requesting. Do you want to see

22 duties put in place? Do you want to see

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1 reference prices or something else?

2 And I'd also like to know your view of

3 whether those types of measures would be

4 supported by strawberry growers across the nation

5 and, if not, why not?

6 MR. PARKER: Well, thank you, Mr. --

7 Assistant Secretary Kessler.

8 I can't speak for strawberries grown

9 in other parts of the country. Basically, during

10 the winter you have the Florida window and there

11 is some production in southern California.

12 A 301 would allow the federal

13 government to investigate and then take actions

14 based on those findings. Tariff-rate quotas

15 could make sense. I am not a big fan of

16 reference pricing, although maybe a combination

17 of tariff-rate quotas and reference pricing.

18 To me, the problem with reference

19 pricing is that if you establish a reference

20 price that's profitable for Florida growers, you

21 have really guaranteed the Mexican growers a

22 tremendous profitable price and so they can get

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1 loans from banks based on that business model all

2 day long.

3 I mean, so I think we have to be

4 careful with reference pricing, although it could

5 be a component of escalating tariffs based on

6 volume tariff-rate quotas.

7 And unless there is other laws that

8 would allow us to have standing, which I am not

9 familiar -- I am not aware of, you know, 201

10 would not work for us.

11 The 301 seems to be the only path

12 forward for our industry and many other

13 commodities in Florida.

14 CHAIR KIMMITT: Thank you.

15 MR. PARKER: Mr. Kessler, anything

16 short of somehow controlling the amount of volume

17 is going to fall short of what we need.

18 MR. KESSLER: Okay. Thank you, sir.

19 CHAIR KIMMITT: Thank you, Mr. Parker.

20 We will now welcome Mr. John Sizemore,

21 representing Sizemore Farms.

22 MR. SIZEMORE: Good afternoon.

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1 Committee, I sincerely appreciate the

2 opportunity to speak before you.

3 My name is John Sizemore, a fourth-

4 generation Florida strawberry grower. My family

5 has spent 95 years in the Florida strawberry

6 industry, with each generation working to

7 preserve their livelihood, pass on this way of

8 life to the next.

9 Our family farm has stayed afloat

10 through foreign wars and economic depressions,

11 adapting to meet the challenges of the day, and

12 continuing to provide fresh fruit for Americans

13 during the winter season.

14 Generations that came before me kept

15 farming through the Great Depression and World

16 War II. But I fear the ongoing allowance of

17 unfair Mexican trade practices will be too much

18 for sustainment.

19 Without relief, I believe the losses

20 sustained as a result of Mexico's ascension in

21 the U.S. market will be catastrophic to our

22 farms, ending our family's farming legacy with

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1 me.

2 In my 33 years of operating our farm,

3 the greatest challenge has been increased Mexican

4 competition in the winter months. We simply

5 can't compete with Mexico's unfair trade-

6 distorting practices.

7 Their predatory pricing strategy,

8 surging volumes, and elaborate subsidy programs

9 have had a devastating impact on Florida

10 strawberry producers.

11 The data presented by the University

12 of Florida and our Department of Agriculture

13 prove that Florida producers like myself are the

14 casualties of this growth in Mexican imports.

15 While our farm has managed to survive

16 consecutive seasons of the depressed prices, many

17 of my friends have not.

18 Our local industry has dwindled over

19 the past 20 years with only one-half of the

20 number of growers surviving the devastating

21 impact of Mexican dominance.

22 This is under NAFTA and USMCA does not

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1 correct. If you do not address this issue now,

2 multi-generational farms will continue to go out

3 of business.

4 As you're aware, specialty crops

5 receive no government subsidy. We are not

6 looking for a handout, just a fair chance in the

7 fight.

8 I feel the best arbiter of any

9 industry is a free and fair market. I humbly ask

10 the Office of the U.S. Trade Representative to

11 investigate and remedy the unfair advantages

12 Mexican producers enjoy.

13 We no longer have the luxury of time

14 to continue taking no action if we want to save

15 our U.S.-grown supply of fruits and vegetables

16 during our seasons.

17 If there is one thing the ongoing

18 COVID-19 pandemic has highlighted it is the need

19 for domestic control of critical industries.

20 There is no denying that food security

21 is national security, for the farmer feeds us

22 all.

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1 Thank you.

2 CHAIR KIMMITT: Thank you, Mr.

3 Sizemore. I believe Ambassador Doud has a

4 question for you.

5 MR. DOUD: John, good to see you.

6 MR. SIZEMORE: Yes, sir. Good to see

7 you, Ambassador.

8 MR. DOUD: So you mentioned predatory

9 pricing practices on the part of Mexico. Can you

10 elaborate on that for us?

11 MR. SIZEMORE: Yes, sir. Thank you

12 for the question. One thing that comes to mind,

13 Ambassador Doud, is that it is my understanding

14 and -- that the data presented by our economists

15 show that Mexican crossings of strawberries

16 coming through the eastern U.S., which is

17 typically our market, and the western U.S. are

18 often as much as $2 cheaper coming east and that

19 was my reference for predatory pricing.

20 MR. DOUD: So who's eating that $2,

21 John?

22 MR. SIZEMORE: I am sorry. Who's

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1 eating it?

2 MR. DOUD: Yeah.

3 MR. SIZEMORE: Well, I think every --

4 MR. DOUD: Who's absorbing that $2?

5 MR. SIZEMORE: I think every producer

6 in the market loses that $2. I think Florida

7 producers in particular lose that.

8 MR. DOUD: So on the -- on the Mexican

9 side, who is -- are they -- is the government

10 assuming that $2? Is the Mexican producer

11 assuming that $2? Who is taking that on?

12 MR. SIZEMORE: The sales organization.

13 Whoever sold the product is marketing it at $2

14 less in an eastern market than they are in a

15 western U.S. market --

16 MR. DOUD: Okay.

17 MR. SIZEMORE: -- is my opinion.

18 MR. DOUD: Thank you. Good to see

19 you.

20 CHAIR KIMMITT: Thank you, Mr.

21 Sizemore.

22 We will now welcome Ms. Hilda Castillo

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1 of Castillo Family Farms.

2 MS. CASTILLO: Good afternoon.

3 My name is Hilda Castillo of Castillo

4 Farms Food Corporation in Plant City, Florida.

5 My husband and I moved here in 1989 from Mexico

6 and worked full time for a strawberry grower

7 while farming two acres of strawberries of our

8 own.

9 We are the first generation of farmers

10 and our children is the second generation and

11 farming with us today with our family with all

12 our siblings working together for the farm.

13 We have grown from two acres to five,

14 then seven acres, and then with steered away my

15 brother in 2007. My husband and I work full time

16 for a better opportunity for our kids, grandkids,

17 and their families.

18 It is my hope that my kids and future

19 generations will have the opportunity to continue

20 to farm and do an ever better job than we have

21 done.

22 We face grave challenges with Mexican

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1 imports of strawberries, even through there in

2 Plant City. We plant many fruit here in Florida.

3 Food from Mexico is on the shelf during our

4 season.

5 There are times when we are throwing

6 food on the ground. Here in Florida, dealers

7 profit. If we had the protection of fairer trade

8 opportunities, we could sell the food. The

9 strawberry plants have to stay cleaner so we have

10 to keep picking every -- we keeping -- we have to

11 keep picking everything. We lose money to

12 Mexican imports.

13 My children always say the farming was

14 too much work when they are young -- they are

15 younger. We work seven days a week and only take

16 one week off every year. They always want to

17 play with their friends but miss out times due to

18 the farming.

19 Today, my sons love farming and do

20 everything from planting to harvesting and

21 working around the farm. When they were young,

22 they would come and work after school to help run

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1 the farm.

2 They have grown to love and appreciate

3 the hard work that goes into farming. I tell my

4 kids that when we do something right, we take

5 hard work. We have to do for better

6 opportunities and be the best farmers we can be,

7 and we only be able to moving forward with a

8 trade remedy.

9 Aside from strawberries, we grow

10 vegetables to survive, but strawberries are the

11 main crop. We use the same plastic and row

12 system for our vegetables. We have to sit down

13 and cut costs to carry us over another strawberry

14 season. The vegetable window is so short it's

15 not viable for us to only grow vegetables.

16 In the future, if strawberries

17 continue to be imported from Mexico at such great

18 volume, we will be out of the strawberry

19 industry.

20 We need the protection while we are

21 harvesting, labor supply and regulations. Some

22 of my employees have been with us for over 14

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1 years. But labor shortage continues to be an

2 issue.

3 The continuing labor shortage -- the

4 expense of the labor continues to grow and

5 regulations are made and overlap. Finally

6 becoming increasing expenses and making ordinary

7 profit earn less and less. It's hard to profit

8 when we are fighting against imported food, an

9 issue that has to be resolved through a trade

10 remedy.

11 In 2010, Secretary Vilsack from USDA

12 visited our farm and he asked us what is the plan

13 for the future. I told him I wasn't certain but

14 maybe someday we can have a cooler -- a cooling

15 facility along with the farm. It's better

16 opportunities in today's market.

17 We will have more control over the

18 returns to the farm and lower costs. Some weeks

19 we may be harvesting for only $2 a flat after we

20 pay sales commission included. We never know

21 what happened and we often continue to harvest

22 and get nothing in return.

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1 We grow conventional strawberries and

2 40 acres in organic strawberries. We work very

3 hard to provide good food and vegetables for

4 every family table in the USA.

5 A goal for my family is to one day

6 have a sales team and a crew. One of my sons is

7 receiving his degree in marketing and there could

8 be an opportunity for him. We have achieved the

9 American dream.

10 When I come here from Mexico I was 17

11 years old where we did not have this opportunity.

12 I fear that between the cost of the labor

13 regulation pressures but mostly imports from

14 Mexico, our American dream will not be viable for

15 future generations.

16 Thank you.

17 CHAIR KIMMITT: Thank you, Ms.

18 Castillo.

19 I think we have time for one or two

20 questions.

21 Assistant Secretary Kessler, do you

22 have any questions for Ms. Castillo?

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1 MR. KESSLER: Yes. Thank you very

2 much, Ms. Castillo, for sharing your story and

3 your family's story.

4 I'd like to ask a question about the

5 last statement that you just made. You

6 referenced three factors that imperil the

7 survival of your farm: cost of labor, regulatory

8 pressures, and imported produce from Mexico.

9 Could you elaborate on each of those

10 three factors, what they are and how they are

11 affecting you?

12 [Translating for Ms. Castillo.]

13 PARTICIPANT: She says if you can

14 minimize the -- they say if you can minimize

15 what's coming in from Mexico, it would help them

16 have bigger profit here. When it comes down to

17 labor, regulatory pressures, there is more --

18 there is more costs.

19 It's bringing up costs because more

20 regulations are coming up -- new regulations,

21 which increase costs here. The profit increases

22 -- or the costs are going up.

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1 They could regulate less. The new

2 regulations increase costs. It will be a big --

3 and when, you know, like, less from Mexico and

4 sell more from the U.S. then we wouldn't have to

5 throw it on the ground. We would have enough

6 product here.

7 MR. KESSLER: Thank you.

8 CHAIR KIMMITT: Thank you, both, and

9 thank you, Ms. Castillo.

10 MR. KESSLER: Thank you.

11 CHAIR KIMMITT: We will now welcome

12 Mr. Joel Connell from Grimes Farms.

13 MR. CONNELL: Good afternoon. I'd

14 like to thank you for the opportunity to speak

15 and for your attention to this matter.

16 My name is Joel Connell. I am a

17 strawberry grower in Plant City, Florida. Like a

18 lot of these guys before me, I am not a third,

19 fourth generation farmer.

20 Not raised in the farming industry,

21 but I've farmed since I got out of school. I

22 went to work for Mr. Grimes as a farm manager and

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1 I still currently manage some of his farms.

2 We grow around 750 acres of

3 strawberries during the winter season and about

4 400 to 500 acres of watermelons in the spring.

5 It has always been my dream since I

6 was a kid to have a farm of my own, something

7 that I could pass on to my four children,

8 something they could be proud of.

9 Ten years ago, I received that

10 opportunity. Over the past 10 years, Mr. Grimes

11 and I have been partners and I began to see my

12 dreams come true.

13 However, each year seems to be more

14 difficult with unfair trade practices and loss of

15 market share due to Mexican fruit production.

16 During the past three seasons, strawberry prices

17 have gotten so low that it's been cheaper for us

18 to strip the fruit from the plants, throw it on

19 the ground, rather than pack it for fresh market.

20 We discarded millions of pounds of

21 fruit that had no defect other than there is no

22 place for them in the market.

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1 The sole reason behind this decision

2 is a major loss in market share from Mexican

3 production. Our current situation is not

4 sustainable.

5 Without immediate attention to these

6 unfair trade practices, many family farms like my

7 own will cease to exist.

8 It's no secret that Mexican fruit

9 production has been subsidized for years by their

10 government, thus creating an uneven playing

11 field.

12 Unless something is done to create

13 fair trade, the future of the Florida strawberry

14 industry is very bleak. Basically, we are in a

15 battle with an opponent who have an unfair

16 advantage and you are our first line of defense.

17 All we are asking is that you level

18 that playing field. That's the end of my

19 prepared statement. I'll be glad to answer any

20 questions you have.

21 CHAIR KIMMITT: Thank you very much,

22 Mr. Connell.

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1 I'll turn it over to Under Secretary

2 McKinney if he has any follow-up questions.

3 MR. McKINNEY: Yes, and I don't mean

4 to be a stuck record here but I understand the

5 situation. I just want to make sure I understand

6 from your standpoint what you believe the remedy

7 or remedies would be.

8 We have heard from different people

9 from across the U.S. We have heard 301 several

10 times. We have heard from another person some

11 creative marketing schemes -- you know, farm

12 program kinds of things.

13 In your view, what is the resolution

14 to assist you and your family in the operation

15 there?

16 MR. CONNELL: Well, I appreciate your

17 question. I am not a trade expert. I am not an

18 attorney. I am just a farmer. But it would be

19 my understanding that the next course of action

20 would be the 301 investigation.

21 See where that leads us. Try to level

22 this playing field out so that they don't have

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1 such an advantage over us.

2 MR. McKINNEY: Thank you. Thank you.

3 CHAIR KIMMITT: Thank you, Mr.

4 Connell, and thank you for your testimony.

5 We will now welcome Mr. Dustin Grooms

6 of Fancy Farms, Incorporated.

7 MR. GROOMS: Good afternoon. My name

8 is Dustin Grooms. I am a fourth-generation

9 Florida farmer. I've been farming with my father

10 since I was a kid. I took over our farm a few

11 years ago when my dad retired.

12 Before farming, I was a motor

13 transportation specialist, a paratrooper, and a

14 United States Army drill sergeant.

15 My dad started Fancy Farms in 1974.

16 It's my hope to continue passing on our family

17 farm to our future generations as one day I will

18 pass it on to my daughter.

19 We truly are a multigenerational farm.

20 Besides my immediate family, my aunts, uncles,

21 cousins, and all in between have worked on our

22 farm.

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1 We formally farm 235 acres but we are

2 down to 125 today, strawberries in Plant City,

3 Florida. We have also grown peppers, squash,

4 pickles, okra, peas, eggplants, you name it.

5 I am asking for your help today in our

6 fight against imported produce. Mexican imports

7 have crippled our strawberry prices in Florida as

8 well as other crops.

9 This issue has continued for far too

10 long without a solution. The seriousness of the

11 seasonality issue has been recognized by Congress

12 and the U.S. government dating back to 2002 Trade

13 Promotion Authority legislation, which instructed

14 the U.S. government to fix the problem.

15 The same instruction was repeated in

16 2015 TPA law and every administration over the

17 past two decades has acknowledged the pressing

18 need to get a solution in place.

19 Yet, nearly 20 years later, farms are

20 still left defenseless against unfair Mexican

21 trade practices. At our farm, we harvest the

22 bulk of our crop below the production cost.

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1 This has forced many farms out of

2 business, left them owing a lot of money. The

3 banks are hesitant to lend money for farming

4 anymore because of this reason. Our farm has

5 also felt the backlash of those effects.

6 We have actually had to sell off land

7 to pay bills to have enough money for the

8 subsequent year, hanging on to hope that we would

9 survive another season with the ending of NAFTA

10 to make a difference.

11 Gentlemen, we are running out of land

12 and time to keep moving forward. The future of

13 Florida agriculture is at a pivotal point in

14 time. We need change to be able to continue our

15 legacy of farming from one generation to another.

16 We can grow all kind of food here in Florida if

17 we are given the chance. But with the Mexican

18 imports looming over us, I am afraid the future

19 of Florida's agriculture fate might be destined

20 for failure.

21 Likewise, when the Mexican shippers

22 are allowed to engage every year in pricing

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1 schemes designed to price our Florida produce out

2 of the eastern markets, Florida growers will

3 inevitably be forced out of business.

4 The day the imports take over, I

5 guarantee you they will inflate the prices so

6 high you won't even be able to afford it.

7 Ambassador, today we need your help to

8 be part of the solution for Florida agriculture.

9 Could be a great story 30 years from now to tell

10 the grandkids about how you helped influence a

11 sustainable future for Florida agriculture.

12 We have a sense of urgency. This

13 administration needs to institute a trade action

14 this year that we can stop and reverse the

15 effects of the unfair Mexican trade practices.

16 The fate of many Florida farms, including mine,

17 is in your hands.

18 God bless.

19 MR. DOUD: Well, Dustin, from one

20 Kansas farm kid to a Florida farm kid, thank you

21 for that testimony.

22 You've alluded to this but I want to

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1 maybe go back and have you speak on one point

2 that's interesting to me.

3 You talked about cutting acres,

4 cutting costs, cutting, cutting. What has that

5 done to your efficiency of your operation by

6 doing that? I don't want to ask a leading

7 question here but I am assuming your efficiency

8 hasn't improved amid all of that either.

9 Is that a fair thing to say?

10 MR. GROOMS: Negative. We are just as

11 efficient as we ever were, probably if not

12 better. It's just the facts that the Mexican

13 imports are coming in, they are taking shelf

14 space, and we are not allowed to get that market

15 and that's what's -- that's what's killing the

16 deal right there, period.

17 MR. DOUD: Thank you.

18 CHAIR KIMMITT: Thank you.

19 Under Secretary McKinney, do you have

20 any questions for Mr. Grooms?

21 MR. McKINNEY: Well, most of this is

22 about trade with Mexico. That's my area. But I

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1 am just curious if there are other things that

2 USDA might consider doing to help you out. I'll

3 just leave it open ended in that regard.

4 MR. GROOMS: Yes, sir. Thank you for

5 the question. And it goes back to what all the

6 other growers are saying. At this time, I think

7 we need to move forward to 301 and start there,

8 and see where it leads to and see what happens

9 and we can build upon that and get to a solution.

10 MR. McKINNEY: Thanks very much.

11 CHAIR KIMMITT: Thank you, Mr. Grooms.

12 We have one final witness in this

13 session. We welcome now Mr. Gene McAvoy from the

14 University of Florida.

15 MR. McAVOY: Thank you. I appreciate

16 the opportunity to speak to you this afternoon.

17 I am Gene McAvoy and for the past 23

18 years I've been working with the University of

19 Florida Institute of Food and Agricultural

20 Sciences as a regional specialized vegetable

21 extension agent working with commercial growers

22 in southwest Florida around Immokalee area, and I

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1 have witnessed firsthand the impact of unfair

2 Mexican competition to the local vegetable

3 industry.

4 When I first started working in this

5 area in 1997, we had nearly 300 medium-sized

6 vegetable farmers in southwest Florida and most

7 of these were independent family farmers that

8 produced winter vegetables on a commercial basis

9 and they were able to make a successful living,

10 supporting their families, sending their kids to

11 college.

12 Now in 2020, we have fewer than 80

13 farmers left with most of the small and medium-

14 sized growers having been pushed out of business

15 by the dumping of Mexican produce below cost,

16 resulting in unfair competition.

17 And should these practices be allowed

18 to continue, it's very difficult to see how many

19 of the remaining farms will be able to continue

20 to survive.

21 And here in Florida, agriculture is

22 our number-two economic engine of our economy and

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1 especially here in the heartland.

2 If you get away from the coastal

3 areas, the tourism areas, agriculture is what

4 drives our economies, and when farmers make money

5 the local economy makes money.

6 They buy trucks. They buy services.

7 And it's harming not only the growers themselves

8 but it's harming the local economies here in the

9 heartland area.

10 Our growers support free trade, as

11 others have mentioned, but it must be fair trade.

12 We need relief measures now. Otherwise, the

13 devastation to the Florida industry that we have

14 experienced over the past two decades under NAFTA

15 and now USMCA will continue to grow worse.

16 To put it simply, we can't compete

17 with a country that uses unfair trade-distorting

18 practices like Mexico has for the past 20 years.

19 Our years of continuing losses have put our

20 specialty crop industry survival at risk.

21 Mexico employs predatory pricing

22 strategies, surging volumes, and subsidy programs

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1 to aid their growers in all aspects of

2 production: infrastructure for protected

3 agriculture, equipment, post-harvest management,

4 genetic resources, irrigation technology, and

5 more.

6 And all of these have made Mexico

7 emerge as the largest exporter of fruits and

8 vegetables to the U.S. winter market during

9 Florida's prime winter growing season.

10 Again, our producers have been

11 casualties of this growth and year after year,

12 Florida production has fallen in inverse

13 proportion to increases in Mexico in volume.

14 Economic data by my colleague, Dr.

15 Guan, paints a very stark picture. The first

16 casualty was tomatoes in 2000. Fresh tomato

17 production in Florida -- since 2000, fresh tomato

18 production has exhibited a steady decline. We

19 were at 39 million pounds. Florida was equal to

20 Mexico.

21 Now Florida has fallen to -- from

22 39,000 acres in 2000 to about 27,000 acres now.

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1 And we have seen this repeat itself consistently

2 as producers in Mexico have targeted additional

3 specialty crops.

4 As I mentioned, tomatoes were the

5 first casualty. They have achieved some relief

6 with the suspension agreement. But Mexico has,

7 again, targeted other crops. We have seen

8 peppers, squash, watermelons.

9 As others have testified,

10 strawberries, blueberries and more. Some of my

11 growers have moved to organic production to try

12 to carve out a niche and now we are seeing

13 increased competition from Mexico in the organic

14 market.

15 Again, I just don't see how we are

16 going to survive in the future unless we have a

17 viable, effective solution and some sort of trade

18 remedy to address these unfair trading practices.

19 If you look at the cost of production

20 on crops, we see crops coming in at $5 a carton

21 for tomatoes and, you know, $7 a carton for

22 peppers, and it's far below our production cost.

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1 And it's difficult to see how even

2 Mexico can produce these crops at that price when

3 a tractor in Mexico costs the same price.

4 Chemicals in Mexico cost the same price.

5 The only advantage they really have is

6 labor, and, you know, it's hard to see how it's

7 just not plain and simple dumping on our market,

8 which is depressing our growers' ability to stay

9 in business.

10 And with that, I'll conclude my

11 testimony.

12 CHAIR KIMMITT: Thank you, Mr. McAvoy.

13 I'll turn it over to Assistant

14 Secretary Kessler if he has any follow-up.

15 MR. KESSLER: Thank you. I thank you

16 for your testimony, sir.

17 I've got sort of a basic factual

18 question. You know, you -- I know that you work

19 with commercial vegetable growers in Florida and

20 we have heard in other testimony that there are,

21 for example, strawberry producers that also grow

22 commercial vegetables.

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1 To what extent is there overlap

2 between growers of vegetables and growers of the

3 other -- these nonperishable products that we

4 have been discussing this morning, blueberries

5 and strawberries and tomatoes and so on.

6 MR. McAVOY: Okay. In my area of

7 southwest Florida there is very little crossover.

8 In central Florida, it is more suited to

9 strawberry and blueberry production because they

10 have cooler winters. There is some crossover.

11 But in my area, vegetable farmers are

12 primarily 100 percent vegetable farmers and they

13 grow a variety of vegetables. But they are

14 vegetable farmers.

15 MR. KESSLER: Okay. And their

16 toughest competition, as you say, is from low-

17 priced Mexican imports, correct?

18 MR. McAVOY: Yes, sir. That's

19 correct.

20 MR. KESSLER: Thank you.

21 MR. McAVOY: You're welcome.

22 CHAIR KIMMITT: Thank you. Thank you,

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1 Mr. McAvoy, for your testimony and thank you for

2 everybody who participated in this session.

3 This concludes Session 3 of our

4 hearing today. We will now take a short break

5 and reconvene at 2:40 p.m.

6 Thank you, everyone.

7 (Whereupon, the above-entitled matter

8 went off the record at 2:25 p.m. and resumed at

9 2:42 p.m.)

10 CHAIR KIMMITT: Welcome back,

11 everyone. We'll now begin the last of our four

12 sessions of the day. And we will begin with Mr.

13 Mark Greef representing Driscoll's Incorporated.

14 MR. GREEF: Thank you very much. Good

15 afternoon and thank you for the opportunity to

16 share my testimony today.

17 I am the vice president and general

18 manager of the eastern region of Driscoll's,

19 which includes Florida and Georgia. I'm a

20 resident of Florida.

21 I've been engaged with the Georgia and

22 Florida berry industries for over two decades

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1 now. Driscoll's works with independent growers

2 to supply the delightful berries to consumers.

3 The winter berries for U.S. consumers,

4 we have growers in both Mexico and in Florida.

5 For the rest of the year we rely on growers in

6 California, other U.S. states and Canada.

7 Driscoll's has operated in the Florida

8 strawberry industry for over 30 years.

9 Driscoll's has filed extensive written comments

10 on both strawberries and blueberries.

11 I will briefly summarize them.

12 Driscoll's is committed for the long-term, in the

13 continuation and in the growth of the berry

14 production in the southeast.

15 At the same time, the growth of the

16 berry production in the southeast. At the same

17 time, we also see continued growth in Mexican

18 production.

19 The berry industry is not a zero sum

20 gain. In which gains in one area means losses

21 elsewhere. Instead, U.S. consumers' demand for

22 berries has increased significantly over the past

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1 25 years. Consumers want berries, and they want

2 them year-round.

3 The consistency and sustained

4 improvement of flavor and overall quality are

5 critical to maintaining this momentum. Any

6 evaluation of the growth and imports from Mexico

7 has to be understood within the context of the

8 produce industry's move to year-round supply.

9 Simply looking at the increase in

10 exports from Mexico ignores the changes in

11 consumption patterns, patents and the production

12 that then follows those changes.

13 Twenty years ago, for example, there

14 were no blueberries in Mexico and few in the

15 southeast. Production in both places has (audio

16 interference). Not because of governmental trade

17 policies but because of market signals.

18 Geographic diversity of supply aids

19 and supports the growth of demand and

20 consumption. During a year where Florida and

21 Georgia have experienced late winter or early

22 spring freezes that limit the crop potential, the

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1 supply from other areas, such as Mexico, aid in

2 maintaining retail shelf space and continue

3 consumption of berries throughout that period.

4 Over the past five years market (audio

5 interference) that average prices for Florida and

6 Mexico's strawberries were comparable. As each

7 production area toggled up or down, depending on

8 the market or weather condition.

9 For blueberries over the past four

10 years, the wide variations of overall pounds per

11 fruit grown producing areas within the U.S. have

12 impacted pricing obtained.

13 We see the role of advancements or

14 innovation in cultivar development, farming and

15 harvest systems, critical going forward. And we

16 have directly invested in this in Florida.

17 These advances will aid in optimizing

18 productivity, operational and production

19 efficiencies, risk mitigation and long-term

20 profitability.

21 As an example, Mexico strawberry

22 growers have invested in hoops and tunnels in

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1 order to reduce the risk that weather brings with

2 rain, et cetera. The Florida berry has been very

3 slow to embrace such opportunities to date.

4 At Driscoll's we're optimistic about

5 the future of berry production in Mexico and in

6 the southeast and U.S. This concludes my

7 testimony. Thank you.

8 CHAIR KIMMITT: Thank you, Mr. Greef,

9 I appreciate your testimony. I'll now turn it

10 over to Ambassador Doud for a follow-up question.

11 MR. DOUD: Yes, Mark, thank you for

12 your testimony here today. I think you're a

13 great person to ask this question.

14 I get the impression from you that

15 everything is fine in Florida. We've heard all

16 day that things are not fine in Florida.

17 So how has Driscoll's been able to

18 avoid the problems that everybody else is having?

19 MR. GREEF: So we have been in the

20 progress of cultivar development and advancement

21 production systems. We've shifted the focus of

22 the timing of production. And also drastically

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1 enhanced the productivity of our fields in order

2 to basically produce more fruit with the same

3 amount of resource.

4 Likewise, if you look at strawberries,

5 we're very focused on looking at things such as

6 moving production out of the soil into substrate

7 systems where we're actually getting out of soil

8 fumigation and things like that. Increasing

9 productivity, reducing weather risk and actually

10 able to drastically reduce harvest costs by

11 taking that approach.

12 You know, there is significantly more

13 supply in berries globally now. And it is not a

14 secret that globally growing berries is more

15 competitive. Far more competitive at least.

16 But we can't settle for doing the same

17 things we did 15 to 20 years ago. We need to

18 progress. We need to advance.

19 And we can't expect consumers to

20 accept the same fruit quality and flavor that we

21 provided them ten or 15 years ago. We're now

22 competing against grapes, apples and also salad

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1 products for flavorful items that people are

2 going to pay good money for and take home.

3 CHAIR KIMMITT: Thank you. Thank you.

4 Under Secretary McKinney, do you have a question

5 for Mr. Greef?

6 MR. MCKINNEY: Yes, I think I'm coming

7 through here. Mark, thanks very much for coming

8 and sharing those thoughts with us.

9 I'm betting that whereas you lead the

10 east or the southeast, I can't remember what you

11 said there, I bet you got a counterpart that

12 leads the southwest or the west.

13 MR. GREEF: Yes, sir.

14 MR. MCKINNEY: Is there a targeting,

15 in your view, of the eastern or southeastern

16 producer versus the southwest or the western

17 producer?

18 Because I have heard that a couple

19 three times today, that there is a deliberate

20 focus on undermining the southeastern producer.

21 In the scope of your company, what do you see,

22 what do you observe?

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1 MR. GREEF: So, I do not observe that.

2 I think that that is realized because there's

3 earlier production from the southeast, especially

4 when we're looking at blueberries, versus the

5 west.

6 And so, you see the Mexican product in

7 place. And hear about it from retailers in the

8 marketplace.

9 You know, whereas California and

10 places like that generally start their production

11 cycles a bit later. Outside of Oxnard

12 strawberries.

13 But I am not, I have not seen a

14 specific focus on moving product to the east

15 coast. I feel that as in, similar to what our

16 strategy is, we actually try to move more Mexican

17 product to the western side because there are

18 trade, there are limitations because of pest

19 issues in the southeast and so on are being able

20 to move blueberries to the west coast. To

21 California and so on.

22 It's very restricted, so I would

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1 rather put blueberries from Mexico into the west

2 and half to the U.S. when I have eastern,

3 southeastern supply. And that's what we look at.

4 I will say thought, for pricing

5 strategies, we look at a single focus pricing

6 strategy across the country. Not affected by

7 retailers who choose to (audio interference) one

8 place or the other, they're facing one certain

9 kind of advantage. Freight advantage or similar.

10 But if you look at the Mexican market

11 as well, per say, you know, a lot of the Mexican

12 retail market is the same players. It's the U.S.

13 retailers that operate in both countries.

14 And so, even that pricing, if we sell

15 fruit from Mexican in Mexico, there isn't a

16 difference in their pricing strategy for us. So

17 I don't see this focus on southeastern producers

18 that is being perceived.

19 MR. MCKINNEY: Thank you.

20 CHAIR KIMMITT: Thank you, Mr. Greef.

21 We'll now welcome Mr. Dan Balbas of Reiter

22 Affiliated Companies.

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1 MR. BALBAS: Hi, thank you. Thank

2 you. Well, we're one of the growers for Driscoll

3 so I think our perspective might be interesting

4 and I'd like to share it.

5 Reiter Affiliated is a multi-berry

6 producer growing Driscoll's proprietary varieties

7 of strawberries, raspberries, blueberries and

8 blackberries. We grow them year-round.

9 We grow them in the U.S., Canada,

10 Mexico, as well as Portugal, Morocco, Germany and

11 Peru. We are family owned and have operated the

12 company that way since the turn of the last

13 century.

14 We've been in Florida since 1990.

15 Focused on winter production of strawberries for

16 some time. And we have continued to perform

17 favorably there against Mexican imports.

18 And we think a lot of that is just

19 being simply closer to the market, the east coast

20 market, as a key factor with something as

21 perishable as a strawberry. We also focus

22 heavily on quality to differentiate ourselves

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1 from our competitors.

2 One thing about it though is we do

3 rely on guest workers from Mexico under the H-2A

4 program. So that's something that is a challenge

5 for us and that we have additional cost burden

6 over Mexico, with the H-2A program and some of

7 the additional costs that are contained in that

8 program.

9 We have been, we did our first

10 blueberry trial, we grow really two berries,

11 strawberries and blueberries in Florida. In

12 2001, and have been producing ever since.

13 For us, Florida was a very viable

14 alternative to Southern California due to cost

15 structure. But like everybody else, we have seen

16 significant price erosion.

17 And year-over-year, as volumes have

18 increased, the business has gotten tougher. It's

19 not an impossible business still for us.

20 And we're focusing on two things. The

21 first one is, replacing outdated genetics to

22 dramatically increase our yield and going to

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1 more intensive systems.

2 But the big thing is harvest. That's

3 the biggest area where Mexico has an advantage

4 over our domestic production.

5 While our blueberry harvest and

6 packaging costs generally exceed $1 a pound,

7 Mexico costs much lower. This is driven by the

8 fact that again, most of our harvesters are

9 contracted from Mexico where we have to

10 transport, house them, pay them an adverse wage,

11 et cetera. And that's under the H-2A program.

12 Which is an additional employer cost.

13 Secondly, and probably most

14 importantly, is the large wage disparity between

15 the two countries.

16 What we really seek to do is increase

17 our harvest efficiencies through further

18 mechanization, higher yields. But the reality

19 is, it's getting tougher.

20 We do still have a business. And our

21 yields and our cost of growing the crop is

22 roughly the same as Mexico.

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1 And when we get high yields we can

2 actually out-compete Mexico on growing costs.

3 But putting that fruit in the box is where we

4 lose our competitive advantage.

5 So really, I would urge our

6 representatives, to support advancement and

7 innovation, particularly on the automation of

8 harvest, on mechanization and seek to streamline

9 the H-2A program. We are fully committed to

10 staying in Florida.

11 I mean, for our shareholders, our

12 growers and our employees, as well as the

13 American consumer. And we think we can remain

14 viable.

15 But we're not going to ignore that

16 there is challenges competing on harvest costs

17 and we seek to compete. That concludes my

18 testimony.

19 CHAIR KIMMITT: Thank you, Mr. Balbas.

20 Assistant Secretary Kessler, do you have any

21 follow-up questions?

22 MR. KESSLER: Sure. Thank you very

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1 much, Mr. Balbas. Sir, I'm trying to understand

2 your perspective a little bit more. You're

3 describing some of the same headwinds in the

4 competitive environment that we've heard other

5 witnesses contest to in Florida.

6 You're not requesting the same type of

7 301 investigation or trade remedy as other

8 witnesses. Is that because your business is

9 globally diversified and you're able to kind of

10 shift production? What should we make of that?

11 MR. BALBAS: Well, I think what you

12 should make of it is, I have no responsibility in

13 Mexico but I have some, there is some

14 transparency there.

15 And it seems to me that if we're going

16 to have free trade then the fact that they can

17 harvest cheaper is going to have some impact.

18 And so we have to overcome that through

19 efficiency gains, providing a better product,

20 that sort of thing.

21 We still have a viable business in

22 Florida. That's one key takeaway. But

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1 essentially, the differences are, really come

2 down to harvest cost.

3 As we're closer to the market, that

4 evaporates some of that difference, but not all

5 of it. And so we have to get more efficient on

6 everything else we do. And we're committed to

7 doing that and have been doing that over the last

8 several years.

9 MR. KESSLER: If I may just ask one

10 more question. So we've heard a little bit this

11 morning about some Mexican government programs

12 related to irrigation technology, intensive

13 production, agricultural covers and other types

14 of Mexican government programs that support the

15 farming industry there.

16 Have you come into contact with those

17 and do they affect your business at all?

18 MR. BALBAS: You know, I'm not as

19 aware as I would like to be. In light of what

20 the situation is.

21 I have heard third hand, which is

22 pretty dangerous, that there's a lot of subsidies

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1 in glasshouse production, for example. But I do

2 have some transparency and I do see their growing

3 costs and they're very similar, if not a little

4 higher than ours in Florida.

5 It's the harvest cost that kills us

6 because when you get to a low price point, they

7 can harvest and make the margin and we can't. So

8 really we need to focus, in my perspective, on

9 harvesting efficiently.

10 But really it's, our pinpoints are

11 competing in the labor arena. For, I think,

12 obvious reasons.

13 MR. KESSLER: Okay, thank you, sir.

14 MR. BALBAS: Thank you.

15 CHAIR KIMMITT: Thank you. Thank you,

16 Mr. Balbas, for your testimony today. We'll now

17 welcome our next witness, Mr. Paul Allen on

18 behalf of R.C. Hatton Farms.

19 MR. ALLEN: First I would like to say,

20 thank you for the opportunity. And I also want

21 to thank all of you as leaders for all that you

22 do for our country. Very grateful for what you

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1 do.

2 So I'm Paul Allen, I'm president of

3 R.C. Hatton Farms in Belle Glade, Florida. We're

4 a multi-generational family and we grow sweet

5 corn and green beans, cabbage and sugar cane.

6 And we've been farming since 1948.

7 And that's something we're very proud of. We

8 started farming in southeast Georgia in 2003.

9 Another hat that I wear, which I

10 humbly serve as the chair of the board of

11 directors of the Florida Fruit and Vegetable

12 Association, which represents all fruit and

13 vegetable growers in the State of Florida.

14 Yes, I just want to say my statements

15 are going to be really brief because I think it's

16 extremely, extremely important that you remember

17 what I have to say today.

18 So I want to address the unfair trade

19 practices. Maybe from a little different

20 perspective from what you've been hearing all

21 day.

22 Let's take a look at it from a

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1 historical perspective and the impact of what it

2 means to depend on other countries for food.

3 Florida feeds 79 million people east

4 of the Mississippi with fresh produce for seven

5 months out of the year. Because it's too cold in

6 other parts of the country in the north. From

7 the time of November to May for production.

8 So, in regards to this I have three

9 important points that I want you to remember and

10 not forget, please. Our leaders in World War II

11 understood how important it was to feed our

12 country. And they did not require farmers to go

13 in the draft.

14 My grandfather was one of those

15 farmers. While my grandmother, she was a welder

16 in the ship fields of Savannah, Georgia and

17 delivered these ships, my grandfather, he stayed

18 home and he was able to grow food because our

19 government understood how important it was to be

20 able to feed our country.

21 Our leaders understood that back then.

22 And I challenge you, it's incumbent upon you as

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1 the leaders of this country to protect the

2 ability of the American farmer to feed American

3 people.

4 Number two, I want to challenge you as

5 leaders of our country to not succumb to the

6 threats that Mexico is putting on you. And you

7 need to decide to protect the American farmer.

8 The fact that American officials are

9 making threats, those are the significance of

10 this unfair trade program that we find ourselves

11 in.

12 It is a big deal to Mexico because

13 they know, they know if no changes are ever made

14 Florida is going to be killed. And they're going

15 to own, they're going to own the production of

16 vegetables that feed the 79 million people east

17 of the Mississippi river.

18 They're going to own it because

19 they'll have a freight advantage over California

20 and they'll be able to deliver much cheaper than

21 what other producers will in the country at that

22 time. It was number two.

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1 Number three, during the pandemic in

2 April and May I was forced to destroying food

3 while everyday there was hundreds of loads of

4 produce coming across the border.

5 We asked the Administration to call

6 force majeure agreement and we were turned down.

7 When that happened, we turned to the American

8 people to help buy our produce and not support

9 foreign grown produce.

10 We have seen that the American people

11 have stepped up to the plate and done just that.

12 The Americans have been aware during this

13 pandemic of the trade inequalities when it comes

14 to the American farmer in Florida. And they

15 expect you, the Administration, to make changes

16 to protect the American farmer.

17 I'll close, again, to reiterate three

18 points. From a historical perspective our

19 government protecting food security, it's

20 incumbent on you to do that.

21 Number two, don't succumb to the

22 threats that's being shown. That proves of how

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1 big of a deal this is to the Mexican government.

2 Thirdly, American people are expecting

3 you to make changes that they have been made

4 aware of on this issue. The American people are

5 totally aware of it all over this country.

6 It's clear that specialty crop

7 production in Florida is in a crisis. A crisis

8 that has been more than 20 years in the making

9 under NAFTA.

10 The data that has been submitted to

11 the USTR paints an extremely dire picture. This

12 situation has gone unaddressed until now. But we

13 must have timely relief if we want to save the

14 Florida industry and the U.S. grown supply of

15 fruits and vegetables during the fall and spring

16 months of the year.

17 In order to save this specialty crop

18 industry, my fellow producers and I respectfully,

19 humbly, prayerfully urge that the USTR quickly

20 develop trade relief measures to ensure the

21 future of our industry.

22 I want to thank you for hearing me.

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1 And on behalf of all producers in Florida, thanks

2 in advance for the changes that you are going to

3 make secure Florida production to ensure our food

4 is secure. That concludes, completes my

5 testimony. Thank you for hearing me very much.

6 CHAIR KIMMITT: Thank you, Mr. Allen.

7 I will turn it over to Ambassador Doud for a

8 follow-up question.

9 MR. DOUD: Yes. Mr. Allen, we've

10 heard a lot about the different commodities

11 today. We haven't heard much about commodities,

12 sweet corn, cabbage, green beans.

13 Take a minute and walk me through what

14 you're seeing in terms of imports of those

15 commodities. Presumably they're coming from

16 Mexico or maybe other counties, how that's

17 affected your business and your profitability

18 here in the last couple of years.

19 MR. ALLEN: Well, thanks for asking.

20 Many years ago in Florida, I'll talk sweet corn

21 and green beans, many years ago in Florida, Texas

22 was one of our larger markets.

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1 Texas no longer exists for Florida.

2 It's gone. Absolutely gone during our (audio

3 interference). Whenever it's too cold for Texas

4 to produce, it's warm enough for Florida to

5 produce.

6 That market is gone and we continue to

7 see it creeping more and more and more. And

8 often times whenever prices get to a certain

9 point where we're at or below production costs,

10 they're delivering to the east.

11 And we've got the freight advantage.

12 And they're delivering to the east, still

13 delivering cheaper than we are. That's what

14 we're running into.

15 MR. DOUD: Thank you.

16 CHAIR KIMMITT: Thank you, Mr. Allen.

17 And thank you for your testimony today.

18 We will now welcome Mr. James Alderman

19 on behalf of Alderman Farms. Mr. Alderman, I

20 don't know if it's just on our end but we can't

21 hear you. So if you're on mute, perhaps, or some

22 other issue, we're having trouble hearing you.

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1 I apologize. Mr. Alderman, I think we

2 might be having some technical issues that

3 hopefully we can sort out to hear your testimony.

4 (Audio interference.)

5 CHAIR KIMMITT: Oh. For the time

6 being we're going to go to the next witness, Mr.

7 Sal Finocchiaro, and then hopefully be able to

8 get back to Mr. Alderman.

9 MR. FINOCCHIARO: Yes. Thanks for

10 having me today. Sal Finocchiaro, owner of S&L

11 Beans in Homestead, Florida.

12 Last year we made the very tough

13 decision to shut our operations down. Until then

14 we'd grow a thousand acres of green beans, a

15 thousand acres of squash and zucchini, 200 acres

16 of grape tomatoes.

17 Our farm was a multi-generational

18 family operation. My father founded the business

19 in 1967. My whole life was farming.

20 When I was a little boy I would ride

21 the farm with my dad in the afternoons after

22 school. My children also worked on the farm. My

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1 daughter worked in the office, my son worked here

2 on the farm. Came home from college and worked

3 with me out in the field.

4 (Audio interference.)

5 CHAIR KIMMITT: Apologies,

6 particularly if someone is speaking and the issue

7 is on our end. We at USTR are having trouble

8 hearing.

9 We're going to take a short break and

10 then hopefully be able to come back to Mr.

11 Finocchiaro and Mr. Alderman. So, we're going to

12 go to quick break and probably come back on at

13 about 3:15.

14 (Whereupon, the above-entitled matter

15 went off the record at 3:07 p.m. and resumed at

16 3:17 p.m.)

17 CHAIR KIMMITT: Hi, everyone, welcome

18 back. And thank you for your patience.

19 Unfortunately it looks like we're

20 going to have to deal with the same issue that

21 we've now dealt with twice today already, but it

22 should be the last time. We are going to have to

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1 reset the link.

2 Updated links will be available on

3 USTR's website, but it does mean in the next few

4 minutes you will be kicked out of this current

5 program and you will have to log back in.

6 Apologize for the inconvenience,

7 appreciate everyone's patience in bearing with us

8 as we deal with this. We will reconvene at 3:30.

9 We should have plenty of time to

10 finish at the scheduled 4:10 end time. We have

11 six witnesses to go.

12 And the links will be live before

13 3:30, but we will begin at 3:30. And hopefully

14 everyone is able to log back in prior to that.

15 And look forward to reconvening.

16 (Whereupon, the above-entitled matter

17 went off the record at 3:19 p.m. and resumed at

18 3:31 p.m.)

19 CHAIR KIMMITT: Welcome back everyone,

20 thank you for your patience, especially Mr.

21 Finocchiaro. Apologies for interrupting you

22 halfway through your statement.

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1 We'll now proceed with the remainder

2 of this fourth session and allow Mr. Finocchiaro

3 to, you can pick up where you had left off or

4 begin, probably best to start from the beginning

5 if you wouldn't mind, sir.

6 MR. KESSLER: I think you're on mute,

7 sir. There you go.

8 MR. FINOCCHIARO: Can you hear me now?

9 MR. KESSLER: Yes.

10 CHAIR KIMMITT: Yes.

11 MR. FINOCCHIARO: Okay. My name is

12 Sal Finocchiaro, I'm the owner of S&L Beans in

13 Homestead, Florida.

14 Last year we made the very tough

15 decision to shut down our operations. Until then

16 we'd grow a thousand acres of green beans, a

17 thousand acres of squash, 200 acres of grape

18 tomatoes.

19 Ours was a multi-generational family

20 operation. My father founded the business in

21 1967. My whole life was farming.

22 When I was a little boy I would ride

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1 around on the farm with my dad in the afternoons

2 after school. My children also worked on the

3 farm. My daughter in the office, and my son, who

4 came back from college to work with me in the

5 field.

6 The farm was our whole life. And it

7 was an extremely hard decision to shut it down.

8 But we're in a position where we had little

9 choice.

10 Our situation closing our farm will

11 continue to play out in Florida unless the

12 Administration takes action to stop the unfair

13 trade practices by Mexico.

14 There were others before us who

15 shuttered their operations and there will be more

16 to come if Mexico is allowed to continue with its

17 schemes to put our fruit and vegetable industry

18 out of business.

19 We have been left defenseless against

20 surging volumes of Mexican produce imported into

21 the United States during Florida's growing

22 season. That's what put us out of business, we

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1 just can't compete.

2 The floodgates are always open with

3 the Mexican deal. We've borrowed and borrowed in

4 order to keep farming, but we had to eventually

5 stop.

6 I would farm for nothing if I could

7 just break even. But I couldn't keep losing

8 money every year.

9 The future of the crop industry in

10 Florida is bleak if the Administration does not

11 devise a plan to level the playing field. My

12 family will never farm again. We just can't

13 compete. That's the end of my testimony.

14 CHAIR KIMMITT: Thank you, Mr.

15 Finocchiaro. I will turn it over to Ambassador

16 Doud for a follow-up question.

17 MR. FINOCCHIARO: Okay.

18 MR. DOUD: Thank you, sir. It's tough

19 to even ask a question under these kinds of

20 circumstances, but I think it's important to ask

21 this question. To put it into some context for

22 everybody.

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1 How many people did you employee when

2 you had everything running and everything

3 operational?

4 MR. FINOCCHIARO: About 450 people.

5 And that's --

6 MR. DOUD: Four hundred and 50.

7 MR. FINOCCHIARO: -- including packing

8 houses and harvesters and all.

9 MR. DOUD: Yes. Okay. Thank you,

10 sir.

11 MR. FINOCCHIARO: Yes, sir. It's a

12 lot of people.

13 MR. DOUD: Yes, sir.

14 MR. FINOCCHIARO: A lot of people out

15 of work. We've had people that worked for us for

16 52 years.

17 Generations. Three generations. My

18 son's third generation. And now we're, you know,

19 we love farming.

20 There's a lot of this more to come if

21 something doesn't change. It's very, very sad.

22 Because we'll be dependent on Mexico to feed us

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1 for the winter time, you know. It's just a sad

2 situation.

3 CHAIR KIMMITT: It is, sir. Thank you

4 for your testimony, Mr. Finocchiaro. Again,

5 trying to get back on schedule for the time we

6 lost.

7 MR. DOUD: Thank you, sir.

8 CHAIR KIMMITT: We'll now turn to Mr.

9 James Alderman representing Alderman Farms.

10 MR. ALDERMAN: I just want to make

11 sure you can hear me?

12 CHAIR KIMMITT: We can, sir.

13 MR. ALDERMAN: Okay. Good afternoon

14 and thank you for the opportunity to testify

15 today.

16 My name is Jim Alderman. I'm a

17 vegetable producer and have been since 1979 in

18 eastern Palm Beach County. Between Boyton Beach,

19 Delray Beach and Boca Raton.

20 I'm a long time farm bureau member.

21 We and our farm are proud to be able to produce

22 the finest quality and the cleanest organic

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1 produce in the United States.

2 Our tomatoes are bar none. There is

3 nothing to compete with us. Our vine ripe

4 organic tomatoes.

5 A few years ago this area was

6 considered the winter vegetable capital of the

7 United States. Today, along with my son and a

8 lot of dedicated employees, we farm approximately

9 1,100 acres of organic vegetables.

10 To include peppers, tomatoes, zucchini

11 squash, yellow squash, beans, cucumbers,

12 eggplant, kale, collards and other greens and

13 herbs. They are all under the attack from

14 Mexico. We employee 250 people during our season

15 from October to June.

16 I woke up this morning knowing that I

17 would have to testify today in such an important

18 meeting. And asked myself, what has changed.

19 What has changed.

20 My neighbors are all gone. They're

21 out of business. They include DuBois Farms,

22 Whitworth Farms, Big Red Packing, David Neal

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1 (phonetic), Ruski (phonetic) Farms, Bobby Conrad

2 and many others.

3 Other farms have decreased production

4 drastically. Then I asked the question, why.

5 These were all great farmers, great businessmen

6 and leaders in our community, what happened.

7 NAFTA.

8 NAFTA opened the floodgates from

9 Mexico for the importation of fruits and

10 vegetables. At first, tomatoes were targeted.

11 Today there are over 200 fewer farmers in the

12 state of Florida since NAFTA began.

13 With the tremendous landmass and

14 different elevations, Mexico can shift its

15 production to peppers in every crop grown in

16 Florida, to include strawberries, beans, corn,

17 squash, cucumbers, herbs. Not only conventional,

18 but organic as well. High volumes of underpriced

19 produce.

20 Let's talk about competition.

21 Competition is very important. We believe in

22 competition.

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1 As a Florida farmer I welcome

2 competition, but it must be fair competition.

3 Our domestic producers competing with the

4 resources of foreign government is not fair.

5 When prices at the U.S. border blow

6 our harvesting cost it makes it impossible for

7 our farms to compete. So many times during the

8 season prices are quoted below our harvesting and

9 packing cost. Which leaves no money for

10 production costs.

11 Mexico has done to Florida farmers

12 what China has done to our manufacturing

13 industry. There are so many similarities.

14 Small to mid-sized manufacturers in

15 the U.S. cannot compete with China for the same

16 obvious reasons. Now, in the global pandemic,

17 we're dependent on China. Do we want this for

18 our produce, also, from Mexico?

19 This, to me, is a national security

20 risk. As a farmer for the past 41 years in Palm

21 Beach County, I ask you to please put our U.S.

22 farmers on a level playing field with Mexico.

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1 Pricing is most concerning. We cannot

2 continue to sell below our costs. This must be

3 resolved. It must be resolved now. This has

4 been going on since NAFTA. I demand that

5 something be done.

6 I ask that you have an urgency to act

7 now so that our family farms may continue. And

8 my son will be able to continue and pass the farm

9 to my grandsons.

10 For our seasonal and perishable

11 producers, please deliver an effective trade

12 remedy to address these unfair trade practices.

13 Thank you.

14 CHAIR KIMMITT: Thank you, Mr.

15 Alderman. I'll turn it over, Under Secretary

16 McKinney, do you have any follow-up questions for

17 Mr. Alderman?

18 MR. MCKINNEY: Yes, I do. I think he

19 answered the question, if I caught it correctly,

20 but let me just ask it again.

21 I too come from a family farm. We're

22 corn and soybeans, seed corn, seed soybeans and

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1 sometimes we've seen competition come along. And

2 sometimes there's a shift to other crops or

3 different forms of production.

4 I think I heard you say that all of

5 the many, many, many types of crops you produced

6 have been targeted by Mexico. Did I hear that

7 correctly?

8 MR. ALDERMAN: Yes, you did. We have

9 shifted over the years to an organic production.

10 Mexico is shipping organic produce cheaper than

11 what we can grow it. Cheaper than what we can

12 pick and pack it.

13 CHAIR KIMMITT: Leaving really no

14 other crop or method of production that's not

15 going to face that competition. I don't mean to

16 put words in your mouth but is that correct?

17 MR. ALDERMAN: No, you're exactly

18 right. I've been through this, starting as a

19 young farmer. We knew we could not compete with

20 the large farms around us so we had to find a

21 niche, okay.

22 So in the last ten, 15 years we've

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1 gone into organic production. And Mexico will

2 quote zucchini squash at the border for $4. It

3 costs us $8 just to harvest it and pack it. Not

4 counting the growing costs.

5 MR. MCKINNEY: Yes.

6 MR. ALDERMAN: So, every day I ask my

7 salesmen, what's the market, what are we doing.

8 And they'll always come back, well, out west

9 grape tomatoes are $5 at the border and that's

10 $12 by flat. It costs me like $14 just to

11 breakeven with that.

12 So, I don't know how they can sell it

13 that cheap, but we when we have, we have an

14 option, either sell it or disk it up. Lots of

15 times, in this past spring, in the pandemic, we

16 had to leave a lot of produce. People were

17 begging for produce and we had to leave it and

18 disk it in because we couldn't sell it.

19 MR. MCKINNEY: Thanks very much. I'm

20 sorry about the loss of the farm, that weighs

21 heavy here.

22 CHAIR KIMMITT: Thank you, Mr.

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1 Alderman, I appreciate your testimony today.

2 We'll now welcome Ms. Marie Bedner on

3 behalf of Bedner Farms. I think Ms. Bedner was

4 having some issues hearing us, which might

5 prevent us from asking questions, but it may have

6 been resolved. But hopefully, Ms. Bedner, we can

7 turn it over to you.

8 MS. BEDNER: Yes, I can hear you now.

9 Good afternoon. My name is Marie Bedner, Bedner

10 Farms, Inc.

11 We are a family owned operation and

12 has farmed bell peppers and cucumbers in Palm

13 Beach County and Martin County since 1950.

14 I'd like to thank you for the

15 opportunity today to talk about how our family's

16 business and livelihood have been affected by the

17 devastating loss of market share, crop volume and

18 sales revenue as a result of surging unfairly

19 priced fruit and vegetable imports from Mexico.

20 I'd like to give you an example of a

21 scenario that happened all too often. Last

22 season during our bell pepper production season

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1 our sales team noticed that one of our largest

2 buyers out of New York had not purchased any of

3 our product for several weeks.

4 When the sales team inquired to find

5 out what the issue was, the buyer told them that

6 the truckloads of Mexican bell peppers were being

7 delivered to his stock with an open ticket.

8 Which means a buyer can pay whatever they want

9 per box.

10 It goes without saying the buyer is

11 going to take that load of produce at a fraction

12 of the cost of what our load is. That's a

13 classic example of dumping, and it occurs

14 frequently.

15 Our operations cost per box of peppers

16 is substantially more than what it is for growers

17 in Mexico. When they load a truck that gets

18 delivered, for example, to a dock in New York the

19 ticket is open. So the buyer can pay $4 a box.

20 Compare that to a box of our product,

21 which has a set price that we can't drop below

22 simply because of what our expenses are to

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1 produce that box. Of course the buyers are going

2 to take the cheaper box every time.

3 Mexico's industry enjoys many

4 advantages over the Florida specialty crop

5 industry. There is no minimum wage or worker's

6 compensation premiums that have been using

7 cheaper chemicals that we haven't used in over 25

8 years.

9 The Mexican growers also enjoy a

10 program of government subsidies that pay for

11 virtually all aspects of production from

12 irrigation, to infrastructure, to technology.

13 Because their cost to produce that box of produce

14 is significantly less than ours, putting us at an

15 extreme disadvantage on a playing field that

16 doesn't come close to being level.

17 The future farming in our area is very

18 bleak. Up and down the road from our location

19 farms go out of business every year.

20 Growers have made the tough decision

21 to sell their land because they simply can't

22 compete with the unfairly priced Mexican fruits

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1 and vegetables. And the surging volumes coming

2 across their border into the U.S. marketplace

3 during our growing season. We need relief and we

4 need it sooner rather than later.

5 It's tragic for families such as ours.

6 Farming is our livelihood. It's all my husband,

7 his brother and our nephews know.

8 My husband and his brothers are fourth

9 generation producers. My nephew represents the

10 fifth. And when you lose those multi-

11 generational farms, you just don't get them back.

12 South Florida was once known as the

13 winter vegetable capital of the world. We have

14 experienced 25 years of suffering and decline in

15 Florida's specialty crop industry under NAFTA.

16 Without an immediate remedy to

17 Mexico's unfair trade practices, farming

18 operations will continue to shut down and

19 American will be forced to rely on a foreign

20 country for our fruits and vegetables during the

21 winter and spring months. No one wants to see

22 that happen.

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1 If there is any silver lining in this

2 coronavirus pandemic it's that consumers are

3 shown how important Florida's specialist crop

4 agriculture is to our ability to produce healthy

5 fruits and vegetables in our own country. Yet,

6 even when Florida growers couldn't sell their

7 crops we were giving them away to food banks or

8 plowing them under, Mexico actually stepped up

9 its shipments to vegetables, including peppers,

10 into the U.S. during that same time.

11 As chair of the advocacy committee for

12 Florida Fruit and Vegetable Association, I

13 appreciate the Ambassadors commitment to address

14 the unreasonable trade practices and policies

15 that have caused unfair Mexican pricing and

16 volumes in the U.S. market and the harm that

17 Florida's seasonal and perishable produce

18 industry has suffered as a result.

19 Our industry is in crisis. In order

20 to help save the specialty crop industry my

21 fellow producers and I therefore respectfully

22 urge the USTR Commerce with measures that will

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1 help ensure our industry can survive.

2 Thirty years ago when my father-in-law

3 handed the farming operation over to his three

4 sons and the bookkeeping to me, I made him a

5 promise that the business would be here for

6 future generations. It's really important now,

7 especially since our nephew has three sons, at 5

8 1/2 and twins 2 1/2, they're already on the farm

9 learning how to work.

10 It really is disheartening to think,

11 through no fault of our own, this business will

12 not be here and Art's legacy will abruptly end.

13 I appreciate your time today and that concludes

14 my testimony.

15 CHAIR KIMMITT: Thank you, Ms. Bedner.

16 Thank you for your testimony. Assistant

17 Secretary Kessler, do you have any follow-up

18 questions for Ms. Bedner?

19 MR. KESSLER: Yes. Thank you very

20 much for your testimony, Ms. Bedner.

21 I'm interested in this open ticket

22 pricing mechanism that you described. Can you

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1 explain a little bit more about what determines

2 the eventual selling price in the United States?

3 And also, do you have any information

4 about how widespread the practice is?

5 Is it just bell peppers, is it just

6 New York? Is it other states, other products

7 too?

8 MS. BEDNER: Well, it's all

9 commodities and it's all states that it happens.

10 It just is a simple fact that they're bringing in

11 the truckloads.

12 And since they have no minimum, you

13 know, costs that they can put it in at, the

14 buyers, they just send the truckloads and it

15 shows up and the buyers pay what they want. So

16 it's a widespread practice. I think many people

17 are aware of it.

18 MR. KESSLER: Thank you.

19 MS. BEDNER: Yes.

20 CHAIR KIMMITT: Thank you, Ms. Bedner.

21 We'll now welcome our next witness, Mr. Rick

22 Roth, on behalf of Roth Farms.

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1 MR. ROTH: Good evening. Or good

2 afternoon. Can you hear me okay?

3 CHAIR KIMMITT: We can, sir, thank

4 you.

5 MR. ROTH: Thank you. Thank you for

6 this opportunity. My name is Rick Roth, I'm a

7 third generation Florida farmer and a principle

8 owner of a family operation, Roth Farms, since

9 1986.

10 We produce over 20 types of

11 vegetables, including radishes, lettuce, sweet

12 corn, celery, sugar cane, rice and sod. We also

13 build a state of the art packing house (audio

14 interference) in 2007.

15 My father, Ray Roth, moved to Belle

16 Glade in 1948. I currently serve on the board of

17 directors of the Florida Fruit and Vegetable

18 Association since 1986 and serve on the board of

19 directors of Sugar Cane Growers Cooperative of

20 Florida since 1994.

21 My purpose today is to emphasize the

22 real need for an expanded definition of which

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1 U.S. food producers in petition to the Department

2 of Commerce in USMCA.

3 We felt like the President Trump's

4 America First Foreign Policy voted well for

5 American agriculture in USMCA. Unfortunately,

6 politics played a key role in preventing the

7 abovementioned language from being included in

8 the final document.

9 It is unfortunate businesses are

10 focusing on short-term gains and threats by

11 Mexican buyers. It is blinding them from seeing

12 that our position is just one that will predict

13 all American vegetable producers.

14 Politics winning over policy,

15 unfortunately means that USDA and USTR have

16 failed to properly represent agriculture in the

17 USMCA agreement, America agriculture, just by

18 adding this additional enforcement mechanism.

19 In order for U.S. producers to compete

20 with growers in other countries that may have

21 less regulations and may have lower labor costs,

22 we must at least prevent their government from

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1 subsidizing their infrastructure costs. To get

2 to a reasonable solution, let me focus on

3 something I know about, the effects of NAFTA on

4 the U.S. sugar industry, and specifically how it

5 affected my sugar mill, Sugar Cane Growers Coop.

6 Under NAFTA, the $.15 tariff on a $.20

7 per pound raw sugar in 1995 went to $0 in 2010.

8 George Wedgeworth, our president and CEO,

9 identified early on that our company had to

10 vertically integrate our business in order to

11 prepare for the day when Mexico could ship a

12 million tons of raw sugar into our market each

13 year.

14 In 1998, our sugar mill, Sugar Cane

15 Growers Cooperative and Florida Crystals joined

16 forces and purchased Refined Sugars, Incorporated

17 in Yonkers, New York.

18 Before 2008 Mexico was only sending in

19 1.7 percent of our sugar consumption. In '13 and

20 '14 it was 18 percent. Both years sending

21 approximately two million tons into the U.S.

22 market.

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1 The U.S. industry was able to petition

2 the Department of Commerce and they were able to

3 initiate an antidumping duty investigation. And

4 on October 24th, 2014 the commerce department

5 preliminarily determined that the sugar from

6 Mexico is being, or likely to be sold, in the

7 United States at less than fair market value.

8 I know you all know that, but there is

9 a reason for me explaining that. That was the

10 per sugar infringement agreement in '14.

11 Evidence also confirmed that the

12 Mexican government was knowingly subsidizing the

13 sugar cane mills in Mexico. During times of

14 widespread depressed prices, the Mexican

15 government mandated that the sugar mills pay the

16 Mexican farmers a higher than economically

17 justified prices for each ton of sugar cane.

18 And when the sugar mills face

19 bankruptcy due to overpayment to the growers, the

20 Mexican government gave the sugar mills

21 government loans and then later forgave them.

22 This is a clear example of subsidization.

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1 Though Mexico has economic goals to

2 increase agriculture production and increase

3 exports, we understand that, but it's also a

4 matter of social policy. So let me cut to the

5 chase.

6 First, it just seems so logical to ask

7 for a neutral position, which is, that we just

8 need the right as seasonal and perishable

9 producer to be able to petition for the right to

10 have an inspection to see if whether there is

11 subsidy. We're not asking for special treatment,

12 we're asking for a neutral rule of law.

13 There is another provision I want to

14 explain. Under the 2020 sugar agreement, we call

15 it Sugar Agreement Number 3, there is a provision

16 in there that allows the United States domestic

17 sugar production to compete for market share.

18 And then after we have received all of

19 the WTO sugar, then Mexico can report and send in

20 the remainder. That is called sugar that is

21 additional U.S. needs.

22 That's important to understand because

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1 perhaps there is another solution. And that is,

2 that a cap on Mexican imports, defined as a

3 percentage of total U.S. consumption of seasonal

4 perishable vegetables could possibly work.

5 And let me explain to you why that's

6 important. I know you're having a hard time

7 understanding, let me explain.

8 So what we do know, that once regional

9 vegetable industry is gone, the loss of

10 institutional knowledge, the new varieties

11 development, personnel, specialized equipment and

12 willing producers guarantees that that industry

13 will never come back. Then, the argument that

14 trade agreements encourages competition and

15 lowers consumer prices will be gone because the

16 American consumer will be held hostage to foreign

17 producers that can charge whatever the market

18 will bear for some of our food supply.

19 So my argument is, we have to maintain

20 a trade agreement that allows competition,

21 through competition. So, I believe the events

22 surrounding the COVID-19 pandemic are changing

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1 the parameters of global free trade.

2 These events have uncovered the need

3 for public policy that encourages domestic

4 production of medical supplies in

5 pharmaceuticals. I believe now is the time to

6 consider a policy in USMCA that continues to

7 encourage domestic production. And perhaps even

8 guarantees a minimum that can be produced

9 domestically.

10 Where are the people? Is my question.

11 Where are the people in USDA and USTR that will

12 stand up and say that regional American specialty

13 crop agriculture will not disappear on their

14 watch because of weak enforcement mechanism. All

15 we're asking for is an enforcement mechanism.

16 If there is no subsidization by

17 Mexico, as some people want to suggest, then why

18 does adding this enforcement mechanism cause

19 anybody any problems. Since everyone's real goal

20 is just the right to compete in pure competition.

21 I want to thank you for your efforts

22 to arrive at the best solution for all American

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1 food producers as representatives of our

2 government. And I also want to thank Secretary

3 Perdue and I also want to thank Secretary Ross

4 for their efforts in the tomato and sugar.

5 That's my presentation and I'd be

6 willing to answer any questions.

7 CHAIR KIMMITT: Thank you, Mr. Roth.

8 I think in the interest of time, and to stay on

9 schedule, we're going to move to the next

10 witness. We appreciate your testimony Mr. Roth.

11 Now we will welcome Mr. Patrick

12 Carroll on behalf of Clear Springs.

13 MR. CARROLL: Hello, can you guys hear

14 me?

15 CHAIR KIMMITT: We can, sir.

16 MR. CARROLL: Okay, great. First off,

17 I want to thank everyone for being here today. I

18 know there's a lot going on in the world and it

19 means a bunch to have everyone here working

20 through these issues that are obviously very

21 important to all the southeastern United States.

22 Clear Springs is a grower and marketer

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1 of blueberries and strawberries in Winter Haven,

2 Florida. We provide marketing services to

3 growers both and big and small, across North and

4 South American.

5 But we have specifically reduced our

6 business in Mexico due to, one, the conflict of

7 interest it creates in representing American

8 farmers, and two, the challenging, the

9 questionable business practices we've encountered

10 in our due diligence in the region.

11 Over the last 15 years we've witnessed

12 the surge in cheap Mexican blueberry and

13 strawberry supply resulting in an uncompetitive

14 pricing for American farmers. As a result,

15 Florida farms have seen decreasing, and now

16 negative growth, in production.

17 Over the last three years the price

18 per pound return for our blueberry farm has

19 declined 19 percent. And over the last five

20 years it has declined over 28 percent.

21 Without a reversal in this trend it

22 does not make sense to put another blueberry

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1 plant in the ground.

2 The problem. During the same seasonal

3 market window American farmers directly compete

4 with unfairly price products derived from

5 Mexico's trade-distorting policies. Policies and

6 other influences that negatively impact the U.S.

7 are, one, subsidized capital investment.

8 The Mexican government has, and

9 continues, to directly subsidize infrastructure,

10 equipment, post-harvest management, genetic

11 resources, irrigation technologies and more,

12 estimated to total over $220 million annually.

13 Per scale, that equates to developing

14 roughly 7,000 acres in Florida and 40 million

15 pounds of production for free. The State of

16 Florida's production peak in 2015 with only 5,500

17 acres and 24.8 million pounds of production.

18 Number two, is unfair operating and

19 harvest expenses. Mexico pays their labor an

20 average of $10 a day or $1.25 an hour, assuming

21 an eight hour day, compared to the U.S. where

22 workers are paid up to $15 an hour.

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1 Labor costs are up to 40 to 60 percent

2 of the total cost of production for U.S. farmers

3 producing blueberries and strawberries in the

4 southeastern United States.

5 Number three, extortion of

6 agricultural profits. Mexican cartels have

7 diversified into fruit and vegetable extortion as

8 Mexico fruit and vegetable production increases.

9 Money is actually being taken out of the pockets

10 of hard working American farmers and put into the

11 pockets of extortionist cartel members.

12 In addition, legitimate cargo carrying

13 commercial trucks are often the source of

14 transport for drugs hidden within secret

15 compartments.

16 Number four, no protection under the

17 USMCA. There's a lack of provisions under USMCA

18 for seasonal producers to gain the support of the

19 majority of domestic producers. Moreover,

20 domestic producers are also growers in Mexico

21 creating a conflict in representing the American

22 farmers' interest.

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1 Number five, onto U.S. food security

2 and environmental. Supply from Mexico increases

3 food miles by 2.5 to 3.5 times of that are fruits

4 and vegetables produced in the southeastern

5 United States.

6 In addition, it increases the U.S.

7 reliance on food supply while reducing customers'

8 access to fresh, locally and regionally grown

9 produce.

10 How the Administration can address the

11 problem. First and foremost, we ask the Office

12 of the United States Trade Representative for a

13 fair solution and remedies to combat the unfair

14 trade policies and protect the future of American

15 fruit and vegetable production in the southeast.

16 Secondly, we suggest for your

17 consideration that during established market

18 windows when American farmers produce competing

19 products with Mexico some type of tax or tariff

20 be assessed on Mexican produce that levels the

21 playing field for unfair subsidies and wages.

22 If possible, I would suggest these

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1 funds be, these funds created by this tariff be

2 used to increase funding for border security

3 and/or worker welfare programs in the U.S.

4 I fully support Brittany Lee in her

5 efforts to start the 301 investigation. I think

6 that the driver of the problem is a cost driver.

7 Mexico is the low-cost producer in our

8 window and they will continue to produce until

9 they have the entire market share. I know that

10 will be a question coming up.

11 And also, I wanted to comment a little

12 bit on some of the points made regarding

13 innovation. Florida has been innovating in

14 agriculture for a long time from a varietal

15 standpoint.

16 The University of Florida has come out

17 with varieties yearly to help increase

18 production, quality of fruit, everything else

19 that had been mentioned by some of the other

20 witnesses. And in addition, there has been

21 countless hours spent working on mechanical

22 harvesting of blueberries, which is very

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1 challenging in the southeast due to the nature of

2 the crop in both blueberries and strawberries.

3 With that I yield back and welcome any

4 questions.

5 CHAIR KIMMITT: Thank you, Mr.

6 Carroll, appreciate your testimony today. We're

7 going to now turn to our final witness of the

8 day, Mr. Chris Spencer, on behalf of Florida

9 Governor Ron DeSantis.

10 MR. SPENCER: Good afternoon. Can you

11 hear me?

12 CHAIR KIMMITT: We can, sir. Thank

13 you.

14 MR. SPENCER: Perfect. Thank you. I

15 appreciate the opportunity to testify today on

16 behalf of Florida Governor Ron DeSantis.

17 I'd like to thank Ambassador

18 Lighthizer and the Trump Administration for their

19 promise to fight for fair competition in our

20 domestic market and protect foreign agriculture

21 community.

22 On January 9th, 2020 Ambassador

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1 Lighthizer committed to issuing a trade action

2 plan within 60 days of entry into force of the

3 U.S., Mexico, Canada trade agreement to implement

4 effectively and timely remedies necessary to

5 address any trade distorting policies that may be

6 contributing to unfair pricing in the U.S. market

7 and harming U.S. producers of seasonal and

8 perishable products.

9 The USMCA entered into force on July

10 1, 2020. And we ask the USTR to meet the 60 day

11 commitment without delay, to provide timely trade

12 relief to Florida's growers.

13 At a growing rate Mexico is exporting

14 government subsidized produce into our domestic

15 markets resulting in unfair foreign competition.

16 This Mexican government subsidy is approximately

17 $200 million per year. And President Lopez

18 Obrador has recently vowed to further increase

19 this government support.

20 These subsidized exports have

21 systematically and substantially undercut Florida

22 growers' domestic market share and appear posed

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1 to increasingly do so absent the type of strong

2 action President Trump has taken in support of

3 other critical U.S. industries.

4 Florida produces warm weather fruits

5 and vegetables during the winter season leaving

6 our farmers uniquely susceptible to such

7 practices and unable to remain competitive. The

8 eroded market share and drop in production value

9 of select fruits and vegetables in the state are

10 driving economic and job loss in Florida, putting

11 hard working producers out of business.

12 The agriculture industry is the

13 backbone of Florida's economy providing nearly

14 1.4 million jobs and more than $131 billion in

15 total economic impact to the state.

16 However, the continued import of

17 subsidized produce has had a significant negative

18 impact on Florida's growers. From 2000 to 2018,

19 the value of Mexican specialty crop imports has

20 increased by 482 percent, while the value of

21 Florida's specialty crop cash receipts decreased

22 by 28 percent.

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1 This trend has resulted in an $11

2 billion gap between the value of specialty crop

3 imports from Mexico and those grown in Florida.

4 We commend the Administration's willingness to

5 work with Florida, to assess the impact of

6 inequitable trade policies on the American

7 people, as requested by Governor Ron DeSantis

8 during the USMCA negotiations.

9 And we are thankful for the

10 Administration's open-door policy to hear these

11 concerns from our agriculture industry.

12 Now, more than ever, the State

13 continues to fight the COVID-19 pandemic. We

14 must protect domestic industries and struggling

15 businesses with state economies weakened and jobs

16 at heightened risk, seasonal producers need fair

17 access to import remedies that ensure their

18 survival.

19 The strong action necessary to counter

20 injury to Florida's growers can be met through

21 the use of existing trade authority under Section

22 301 of the 1974 Trade Act. As you know, this

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1 provision gives the U.S. Trade Representative the

2 authority to investigate and respond to foreign

3 countries that engage in acts that are

4 unjustifiable or unreasonable and burden U.S.

5 commerce.

6 We request the U.S. Trade

7 Representative's use of Section 301 to provide

8 relief to our growers or welcome an equally

9 effective alternative that results in fair trade

10 and fair competition.

11 The State of Florida looks forward to

12 continuing to partner with the Trump

13 Administration, to re-balance trade with Mexico,

14 to ensure the livelihood of Florida's agriculture

15 community and a food supply that does not rely on

16 foreign governments.

17 Thank you, and that concludes my

18 testimony.

19 CHAIR KIMMITT: Thank you, Mr.

20 Spencer. I think we have time maybe for one or

21 two questions. I'll turn it over to Ambassador

22 Doud, who I believe has a question.

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1 MR. DOUD: Yes, thank you, Mr.

2 Spencer. I thought maybe just we would get your

3 perspective, for a moment, to give your

4 perspective on the availability of farm workers

5 in Florida.

6 MR. SPENCER: Can you hear me?

7 MR. DOUD: Yes.

8 MR. SPENCER: Okay. So, I'll defer to

9 what our industry partners have said throughout

10 the day. I note that they have a wide range of

11 input and a wide range of perspective on that

12 matter.

13 I have not personally monitored that

14 in the conversations that we've had with our

15 industry.

16 This issue of the next in subsidized

17 imported produce has been the substantial issue

18 that continues to come up in our conversations

19 with our industry partners.

20 MR. DOUD: Okay, thank you.

21 CHAIR KIMMITT: Under Secretary

22 McKinney, do you have any questions for Mr.

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1 Spencer before we adjourn?

2 MR. MCKINNEY: Not a question, other

3 than to say thanks for being there and

4 representing the Governor's Office, that's very

5 important.

6 I just want you all to know that we'll

7 participate actively with my friend, Ambassador

8 Doud and Assistant Secretary over at Commerce,

9 and see what can be done.

10 The one area where we have a great

11 deal of authority and a lot of energy and funds

12 from Congress, frankly, is out in promotion. And

13 I want to reiterate for those that may not have

14 heard it earlier that we have doubled down to try

15 to focus on markets that might help.

16 For example, three new countries

17 received blueberry access, U.S. blueberry access

18 over the last, about five or six months. And

19 we're doubling down, already linking with some of

20 your companies to export that.

21 The other thing I would remind, and I

22 think the Commissioner knows this well, but we

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1 have a, there's a group of the southern states

2 called SUSTA. And it is through them that we

3 provide market access program funds, foreign

4 market development funds.

5 And it's really designed for those

6 brand name companies. Often times that could be

7 some of the farms and representatives that we

8 heard here.

9 And so, I think working with her and

10 her team, who are well aware of this, they've

11 been an active participant, might be another way.

12 So I'm going to focus on the trade promotion, but

13 also, we've got a lot of analysts that work

14 daily, frankly, with USTR and Commerce, and we

15 will be an active part of the analysis coming

16 from this and the next hearing next week.

17 So I just want to say thank you, to

18 you, for representing the Governor's Office.

19 MR. SPENCER: Thank you. And we also

20 appreciate working closely with USDA, with the

21 U.S. Trade Representative's Office, with the

22 Office of the President.

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1 You have been a good resource for us

2 to work with and we look forward to continuing to

3 work with you as we move forward with this.

4 CHAIR KIMMITT: Well, thank you, Mr.

5 Spencer. I want to say, thank you to Under

6 Secretary McKinney for participating today.

7 And I also want to thank Assistant

8 Secretary Kessler and give him the floor for a

9 moment if he has any last remarks before we

10 conclude today.

11 MR. KESSLER: Nothing further, just

12 thank you very much to, Mr. Spencer. Thanks very

13 much to all the witnesses.

14 I think we learned a lot from you all

15 today and have a lot to think about. So thank

16 you very much for spending the time to speak with

17 us today.

18 CHAIR KIMMITT: All right. And thank

19 you to everyone who participated today. And

20 thank you for everyone participating and watching

21 who was patient with us as we worked through some

22 technical issues.

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1 We will have another hearing on this

2 issue next Thursday, August 20th, beginning at

3 9:00 a.m. eastern time. And that hearing will

4 also take place virtually.

5 As a reminder, a transcript of today's

6 hearing will be posted on USTR's website and the

7 public docket in the near future. And thank you

8 to everyone. And this concludes today's hearing.

9 (Whereupon, the above-entitled matter

10 went off the record at 4:14 p.m.)

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A acreage 87:15,19 addressing 39:17,22 249:2 262:10 a.m 1:9 6:2 50:13,14 126:22 127:1 adds 135:13 afternoons 228:21 77:3,5,6 97:19,20 acres 45:9 47:6,7 87:17 adjourn 268:1 232:1 271:3 87:20 110:11 183:7 adjust 34:19 103:20 ag 67:4 75:10 91:1 95:1 abandon 92:19 183:13,14 187:2 104:21 113:21 132:5 abiding 124:15 190:2,4 194:1 197:3 adjusted 135:22 age 67:6 102:16 ability 18:22 19:17 201:22,22 228:14,15 adjustments 138:5 agencies 54:8 29:14 32:18 33:4 34:9 228:15 231:16,17,17 administer 16:18 agency 39:16 43:22 59:10 75:14 236:9 258:14,17 administered 86:4 agenda 17:15 120:12 90:13 93:4 129:16 act 29:4,6 43:21 93:13 127:18 agent 198:21 145:14,15,15 164:17 131:10 239:6 265:22 administration 6:11,21 aggressive 27:21 28:4 170:1 203:8 223:2 actable 59:17 14:4 15:2 16:14,17,20 aggressively 26:18 246:4 action 22:22 37:5 38:8 17:10,20 32:22 37:9 41:16 75:2 able 8:18 34:14 38:14 52:16 54:4 68:16 52:16 53:8,13,18 54:4 ago 67:7 111:16,16 60:15 102:19,22 78:18 90:2 109:4 59:13 75:20 78:21 158:16 162:15 165:7 146:13 167:22 185:7 144:19 165:1 171:18 138:17 165:2 172:7 190:9 193:11 207:13 195:14 196:6 199:9 180:14 192:19 196:13 194:16 196:13 224:5 210:17,21 226:20,21 199:19 209:17 210:10 232:12 263:1 264:2 224:15 232:12 233:10 236:5 247:2 212:19 218:9 222:18 265:19 260:10 262:18 266:13 agree 107:7 157:11 222:20 223:20 228:7 actions 40:1 147:5 Administration's 90:1 agreed 7:19 146:17 229:10 230:14 235:21 176:13 265:4,10 agreement 15:13 16:8 239:8 252:1,2 253:9 activate 129:21 administrations 32:21 37:20 38:1 59:18 above-entitled 50:12 active 269:11,15 129:8 68:17 69:3 79:1 99:13 77:4 97:18 141:1,21 actively 28:2 46:7 administrators 65:18 111:19 112:17 119:16 205:7 229:14 230:16 119:11 268:7 advance 78:3 210:18 119:17 143:21 202:6 271:9 activity 16:22 35:16 226:2 224:6 250:17 252:10 abovementioned 250:7 actors 28:17 advanced 57:7 253:14,15 254:20 abruptly 247:12 acts 266:3 advancement 209:20 263:3 absence 20:3 actual 145:15 217:6 agreements 254:14 absent 264:1 acute 26:9 advancements 208:13 agricultural 1:13,16 8:2 absolutely 82:5 154:7 acutely 14:8 advances 208:17 9:4 14:10 39:10 47:3 165:5 227:2 ad 136:1 138:15 advantage 85:11 52:5 72:12,17 89:22 absorbing 182:4 AD/CVD 16:18 191:16 193:1 203:5 99:10 113:21 127:19 absorbs 133:5 adamant 146:18 213:9,9 216:3 217:4 198:19 219:13 259:6 abundance 67:2 adapt 103:22 223:19 227:11 agriculture 1:16,17,20 abundantly 81:18 adapting 178:11 advantages 169:10 2:9,9 4:3,9,10 8:10 accelerate 89:12 add 26:4 76:2 123:17 180:11 244:4 10:4 11:4 14:8 16:3 accelerated 170:21 added 57:22 adverse 12:3 57:2 18:2 20:5 24:16 46:17 accept 210:20 adding 250:18 255:18 63:21 216:10 50:21 51:6,11,12 53:1 access 53:21 60:16 addition 8:7 48:11 adversely 128:12 53:1 54:15 55:3 56:14 112:2 145:10,17 80:10 133:4 160:3 advising 158:9 56:19 59:19 63:22 156:14 260:8 265:17 259:12 260:6 261:20 advocacy 246:11 64:8 66:21 72:11,19 268:17,17 269:3 additional 56:11 74:16 advocate 30:16 82:6 78:22 79:10 80:7,21 accessibility 122:14 74:20 91:11,14 109:4 118:9 81:14 86:4,5,7,11,22 accessible 131:2 111:22 148:14 153:11 advocating 156:22 87:12,15 92:6 100:16 accession 69:17 202:2 215:5,7 216:12 Affairs 1:16 103:10 125:14 154:14 account 159:13 161:11 250:18 253:21 affect 39:13 100:8 157:12 158:8 161:4 accountable 136:10 Additionally 69:16 119:3 219:17 169:13 179:12 195:13 accounted 86:11 130:3 135:9 Affiliated 3:9 5:10 195:19 196:8,11 accounts 26:13 address 7:15 17:11 213:22 214:5 199:21 200:3 201:3 accusations 119:20 18:20 51:7 66:16 afford 52:12 196:6 246:4 250:5,16,17 accustomed 102:8 70:16 78:15 81:16 afloat 178:9 253:2 255:13 261:14 achieved 111:11 187:8 121:6 138:7 151:9 afraid 195:18 262:20 264:12 265:11 202:5 180:1 202:18 221:18 afternoon 108:20 125:2 266:14 acknowledge 31:15 239:12 246:13 260:10 125:6 132:2 150:20 ahead 50:16 120:18 263:5 168:6 177:22 183:2 aid 201:1 208:1,17 acknowledged 194:17 addressed 36:11 52:8 189:13 193:7 198:16 aids 207:18 acquired 114:18 101:20 205:15 235:13 242:9 aim 92:17 106:19

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Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 303

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C E R T I F I C A T E

This is to certify that the foregoing transcript

In the matter of: Trade-Distorting Policies Affecting Seasonable and Perishable Products

Before: USTR

Date: 08-13-20

Place: teleconference was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

------Court Reporter

NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com